Kugler Stock Trades Stir More Controversy at the Fed. Don’t Tie It to the Cook Case.

Federal Reserve Gov. Lisa Cook (l.) has gone to court to fight President Donald Trump’s attempt to remove her for alleged mortgage fraud. Former Fed governor Adriana Kugler resigned her position following an apparent violation of Fed rules on stock trading. (Drew Angerer/Getty Images)

Key Points

• Former Federal Reserve governor Adriana Kugler resigned due to apparent violations of Fed ethics rules concerning stock trading during her tenure.
• The allegations against governor Lisa Cook involve alleged inconsistencies in mortgage documents filed before she joined the Fed, not in-office violations.
• The Fed tightened its trading rules in 2022 following scrutiny of financial activities by several senior officials during the pandemic.

Former Federal Reserve governor Adriana Kugler’s resignation from the Fed board in August, later tied to stock-trading violations, has quickly become a reference point for evaluating another personnel controversy at the central bank: the Trump administration’s effort to remove governor Lisa Cook over alleged inconsistencies in mortgage documents filed years before she joined the Board.

The comparison goes only so far, however. Kugler’s actions involve apparent violations of Fed ethics rules during her tenure. The allegations involving Cook relate to conduct outside of the Fed’s jurisdiction, and the central bank’s ethics rules don’t apply to pre-appointment conduct.

Although Kugler said in recently released disclosures that her trades were executed by her husband without her knowledge, and without intent to violate Fed rules or policies, Fed Chair Jerome Powell denied her request for a waiver last summer to unwind the positions during a blackout period for Fed officials’ communications and financial activity. She resigned weeks later, following an unexplained absence from the Fed’s July policy meeting. President Donald Trump appointed Stephen Miran, a White House official, to fill her position.

Cook, meanwhile, has denied wrongdoing, and the Fed hasn’t indicated publicly that it views the mortgage matter as an ethics issue. Cook sued Trump, Powell, and the Fed board of governors, and the case will be heard by the Supreme Court in January. The court so far has blocked Trump’s attempts to fire Cook and ruled she can remain in her role through the proceedings.

Comparing the cases reveals several notable contrasts. Kugler’s case involves documented, in-office violations; Cook’s involves the alleged designation in mortgage applications of two homes as primary dwellings, made long before she joined the Fed. “Kugler has sort of admitted that she didn’t comply and resigned,” said Carl Tobias, a professor at the University of Richmond School of Law. “And Cook has said, pretty aggressively, that she hasn’t done anything wrong.”

Under the Federal Reserve Act, governors can be removed only for cause, a standard interpreted narrowly and never invoked before the Cook case. Kugler’s case shows how the Fed responds when its rules are broken, Tobias said, whereas Cook’s underscores the potential limits of presidential power when allegations fall outside that category.

Kugler’s disclosures show multiple transactions involving individual stocks; Fed rules bar senior officials and their families from investing in individual stocks, bonds, or cryptocurrencies. They are also forbidden to make any financial transactions during blackout periods surrounding policy meetings. Kugler had previously amended her 2024 disclosure to acknowledge earlier violations. People familiar with the matter said she had asked Powell for permission to sell the problematic positions during the July blackout window; he denied the request.

The Fed chair hasn’t spoken publicly about Cook’s case.

Aaron Klein, a senior fellow at the Brookings Institution and a former White House official, said Kugler’s filings expose larger gaps in the Fed’s internal monitoring. “How could Kugler be trading stocks for a whole year and the Fed didn’t know it?” he said.

Scrutiny of the Fed’s enforcement of ethics rules has also come into play in the case of Atlanta Fed President Raphael Bostic, who said on Nov. 12 that he would step down at the end of his term in February 2026. Bostic disclosed in 2022 that his financial advisors had executed trades in a managed account during blackout periods between 2017 and 2020.

A 2024 investigation found no evidence that he traded on nonpublic information, but concluded that the transactions created the appearance of impropriety. He isn’t facing a continuing ethics inquiry.

The Fed tightened its trading rules in 2022 after several senior officials were found to have been active in financial markets during the pandemic. Two regional bank presidents resigned in 2021 after their trades drew criticism, and Richard Clarida, then the Fed’s vice chair, stepped down in early 2022 after his own transactions drew scrutiny.

Sen. Elizabeth Warren said this week that the developments surrounding Kugler highlight the need for stricter oversight. “I’ve long pushed for stronger ethics rules at the Fed,” she said. “The American people should be able to trust that the Fed’s decisions are not driven by the personal interests of individual officials or the political interests of Donald Trump.”

Former governor Adriana Kugler and Lisa Cook’s legal team didn’t respond to requests for comment. The Federal Reserve declined to comment.

Write to Nicole Goodkind at nicole.goodkind@barrons.com.