The Federal Reserve Bank of Atlanta disclosed on Friday that its president, Raphael Bostic, has violated U.S. central bank ethics investing rules.
"We learned of transactions that took place during blackout periods and of holdings that violated guidelines set out by the Federal Open Market Committee," wrote Elizabeth A. Smith, Atlanta board chair, in a statement.
"After reviewing the documents and discussing these issues with President Bostic and the Atlanta Fed's chief ethics officer, the board acknowledges the violations and accepts President Bostic's explanation," the statement said. "My board colleagues and I have confidence in President Bostic's explanation that he did not seek to profit from any FOMC-related knowledge."
The statement said Bostic has corrected his financial forms going back to when he first joined the Atlanta Fed in 2017.
"We are satisfied with his revised financial disclosures and the changes he has made in managing his investments," Smith wrote. "The board is also satisfied that President Bostic has established procedures to ensure that future violations do not occur."
Bostic said in a note that the violations were made by financial advisors. The note was sent with financial disclosure forms going back to 2017.
"Since I assumed office, I have ensured that my assets were held in managed accounts that neither I nor my personal investment adviser had the ability to direct," Bostic wrote in the note, according to Reuters.
"Due to my reliance on a third-party manager, I was unaware of any specific trades or their timing, including a limited number that took place during Federal Open Market Committee ... blackout periods or financial stress periods," he continued. "Similarly, I was unaware of when my holdings of U.S. Treasury funds in 2021 exceeded the limits set forth by the FOMC's trading and investing rules."
"At no time did I knowingly authorize or complete a financial transaction based on nonpublic information or with any intent to conceal or sidestep my obligations of transparent and accountable reporting," the note said.
Smith revealed that the Federal Reserve System's Inspector General will review the matter.
"We welcome this review and will cooperate fully to ensure this matter is effectively resolved," Smith wrote.
The disclosure comes shortly after new rules were implemented in response to other ethical problems with officials at the central bank. Last year, officials at the Boston and Dallas Fed banks were forced to resign after financial disclosure forms showed they had been improperly trading.