Adriana Kugler’s Stock Trades Spark Ethics Probe and Resignation from Federal Reserve

Ethics Spotlight Returns to the Fed

In a year already marked by heightened scrutiny over financial transparency in Washington, the Federal Reserve found itself once again in the headlines—this time, with the spotlight squarely on former Governor Adriana Kugler. Kugler, who stepped down from her post in August 2025, became the focus of an internal ethics probe following newly disclosed stock trades made by herself and her spouse, raising fresh questions about the central bank’s ability to police its own conflict-of-interest standards.

Trading Activity Raises Red Flags

It was a series of financial disclosure filings, made public in September 2025, that first revealed the extent of the trading activity. The documents list multiple trades in major companies—including Apple, Cava Group, Southwest Airlines, and Caterpillar—executed between early 2024 and mid-2025. Notably, some of these transactions appeared to coincide suspiciously with so-called “blackout periods,” the days leading up to the Federal Reserve’s critical interest-rate decisions when trading is strictly prohibited for senior officials.

For instance, the filings detail a purchase of Southwest Airlines stock on March 22, 2024, followed by a sale on April 29, 2024—the eve of a two-day rate-setting meeting. Similarly, Cava Group shares were bought just days before another pivotal Fed meeting in March. While the trades were reported as being carried out by Kugler’s husband, Ignacio Donoso, a prominent immigration attorney, the timing and nature of the transactions raised enough concern for the Office of Government Ethics (OGE) to decline certification of Kugler’s disclosure and refer the matter to the Federal Reserve’s Office of Inspector General for further review (Business Insider, Politico).

Fed Ethics Rules: Lessons from the Past

The Federal Reserve had already tightened its ethics rules in 2021, after previous scandals during the pandemic forced the resignation of several top officials, including Vice Chair Richard Clarida. Under the revised policies, senior Fed officials are barred from trading individual stocks and must refrain from any trading during blackout periods. Additionally, a one-year holding requirement was imposed on most investments to prevent even the appearance of impropriety.

Kugler’s disclosures, however, suggest that these strengthened guardrails still leave room for ambiguity—particularly when spouses or other family members control investment accounts. In her filings, Kugler affirmed that the trades were made without her knowledge and that her spouse had not intended to violate any rules or policies. Nevertheless, the optics and the legal questions surrounding the trades were enough to trigger official action.

Waiver Request, Resignation, and Aftermath

By July 2025, as concerns mounted, Kugler reportedly discussed with Fed officials—including Chair Jerome Powell—the possibility of securing a waiver that would allow her to adjust her portfolio without running afoul of the trading restrictions. According to a Fed official cited by Bloomberg, Powell refused to grant the waiver, and Kugler did not attend the subsequent meeting on July 28 and 29, citing personal reasons. On August 1, she announced her resignation, effective August 8, and just days later, she returned to her academic position at Georgetown University’s McCourt School of Public Policy and Economics.

Kugler’s final financial disclosure also noted nearly $50,000 in pro bono legal assistance from the firm Arnold & Porter, likely in connection with the ongoing ethics inquiry.

Systemic Issues and Public Trust

The episode underscores the persistent challenges facing the Federal Reserve and other government agencies in drawing clear ethical lines for senior officials—especially when personal finances are often intertwined with those of spouses and family members. While Kugler has maintained that she was unaware of the trades and that they were promptly reported and divested at the direction of ethics officials, the case highlights the difficulty of enforcing rules that rely on personal attestation and voluntary compliance.

The Fed’s recent string of ethics controversies—stretching back to the pandemic-era resignations—has already prompted broader calls for reform, not just within the central bank but across federal agencies. As the Fed’s internal watchdog continues its review, the episode serves as a potent reminder of how even inadvertent lapses, or the mere appearance of them, can erode public confidence in institutions tasked with overseeing the nation’s financial stability.

Looking Ahead

For Kugler, the path forward appears to be a return to academia, away from the regulatory limelight. But for the Fed, the challenge of ensuring airtight ethical compliance remains. The Inspector General’s findings, whenever they are released, will likely shape future policy and perhaps even spur further tightening of conflict-of-interest rules for the central bank’s top brass.

In the meantime, the story of Adriana Kugler’s short-lived tenure at the Fed stands as a cautionary tale: in an era of heightened scrutiny, the boundaries between public service and private interest must be vigilantly maintained—not just in letter, but in spirit.

Assessment: Kugler’s resignation and the subsequent ethics investigation highlight the ongoing struggle within major public institutions to balance personal financial autonomy with the imperative of public trust. The case illustrates how, even with well-intentioned reforms, effective enforcement and clear accountability remain elusive when financial activities involve family members. Ultimately, this incident signals both a need for stricter oversight and a broader cultural shift towards transparency among those who shape national economic policy.