Raphael Bostic breached Fed trading rules, central bank watchdog says

Federal Reserve Bank of Atlanta President Raphael Bostic violated the Fed’s trading restrictions, the central bank’s internal watchdog said in a report published on Wednesday, while noting there was no evidence that he made trades based on confidential information.

The Atlanta Fed chief created an “appearance of acting on confidential” information from the Federal Open Market Committee following the execution of 154 trades on his behalf since 2018 during the FOMC’s so-called blackout periods, the Fed’s Office of Inspector General said in the report dated Sept. 4 and made public Wednesday. Bostic took over as president of the Atlanta Fed in 2017.

That, in turn, created an “appearance of a conflict of interest,” the IG said (key word: appearance).

On Oct. 14, 2022, Fed Chair Jerome Powell requested the IG to “conduct an independent review of the extent to which the 2017–2021 trading, investment and disclosure activities of President Bostic violated the law or Federal Reserve policies; whether his trading, investment, and disclosure activities warrant further investigation by other authorities; and any other related matters that you deem appropriate.”

Although the report determined that Bostic neither traded on confidential FOMC information nor had any conflicts of interest, the scale and timing of his trades nonetheless raised concerns.

Fed blackout periods usually begin the second Saturday preceding an FOMC meeting and end the Thursday following a meeting. With the next policy decision on Sept. 17-18, the blackout period is currently in effect.