The Federal Open Market Committee (FOMC) announced on Friday that it had formally adopted new rules for senior officials' investment and trading activities. The rules, first published in October 2021, are designed to enhance public confidence in the impartiality and integrity of the Commission's work by preventing any conflicts of interest from emerging.
Officials prohibit speculation in stocks, funds, and cryptocurrencies
Under the new rules, senior Fed officials are not allowed to buy individual stocks or sector funds; may not hold investments in personal bonds, institutional securities, cryptocurrencies, commodities, or foreign currencies; and may not enter into derivatives contracts and engage in short selling or margin purchase of securities. In addition, senior Fed officials will be required to issue irrevocable notice of the purchase and sale of securities 45 days in advance, obtain prior approval of such transactions, and hold investments for at least one year. Trading will also be banned during periods of heightened financial market pressure.
The new rules also require local reserve bank presidents to publicly disclose securities transactions within 30 days. In addition, financial disclosures submitted by the President of the Reserve Bank will be published on the website of the relevant Reserve Bank in a timely manner. Financial disclosures submitted by FOMC members will continue to be available on the government ethics office's website.
In addition to FOMC members and the President of the Reserve Bank, the new rules apply to the Vice President of the Reserve Bank, the Head of Research of the Reserve Bank, FOMC staff, managers and deputy managers of the System Open Market Accounts, heads of Board departments who attend Committee meetings on a regular basis, any other individuals designated by the Chairman, and spouses and minor children of such individuals. The Fed expects that after further review and analysis is complete, more staff will be bound by all or part of these rules.
Officials covered by the new rules will have 12 months to dispose of all property that is not allowed from the date the rules take effect, and in the future, the newly covered officials will have 6 months to dispose of all property that is not allowed. The rule will be implemented from 1 May 2022, but advance notice of transactions and pre-liquidation requirements will be implemented from 1 July 2022.
Specifically, the new regulations include:
1. It is forbidden for officials to hold individual stocks, industry funds, institutional securities, bonds, commodities, cryptocurrencies, foreign exchange and derivatives contracts, and it is forbidden to participate in margin trading;
2. The official must issue an irrevocable notice of the transaction 45 days in advance, obtain prior approval before buying and selling, and hold the investment for at least one year;
3. Trading is prohibited during the FOMC meeting; if the above time requirements span the FOMC meeting, it will be extended by one day to comply with the Fed's silent period regulations;
4. Trading will be prohibited during the period of intensified pressure in the financial market;
5) Regional Fed governors will be required to disclose transactions within 30 days, as currently required by Fed Board members and staff;
6. These provisions will apply to all FOMC members, the First Vice President of the Regional Federal Reserve Bank, FOMC staff, managers and deputy managers of the Open Market Accounts of the Federal Reserve System, heads of Fed Board of Governors, other individuals designated by the Chairman, and spouses and minor children of all such persons;
7. The regulations take effect on May 1, and the prior approval requirements take effect from July 1;
8. Affected individuals will have 12 months to deal with non-compliant positions, and new employees will have a grace period of 6 months.
Fed officials are mired in a stock speculation scandal
Previously, a number of Fed executives were caught in a stock speculation scandal.
On January 14, 2022, former Fed Vice Chairman Richard Clarida announced his resignation as fed governor.
Clarida was appointed Vice Chairman of the Federal Reserve in September 2018 for a term until January 31, 2022, two weeks before the end of his term. Shortly before Clarida's resignation, The New York Times and Bloomberg publicly questioned their february 2020 stock trade. At that time, due to the impact of the new crown pneumonia epidemic and the turmoil in the stock market, Clarida sold three equity funds on February 24, 2020, and bought back one three days later. Clarida filed revised financial statements last December, and the Fed said its original filing was missing.
In September 2020, Boston Reserve Bank President Eric Rosengren and Dallas Reserve Bank President Robert Kaplan announced their early departures. Rosengland faced public criticism for trading stocks and other investments and subsequently left office early citing health concerns. Kaplan claimed that an individual's recent stock trading could cause "interference" to the bank and he left office early.
In addition to Fed officials, U.S. intelligence executives have also exposed earth-shattering scandals.
Senator Richard Burr, Republican from North Carolina, is chairman of the Senate Intelligence Committee and a member of the Senate Health Committee. Npriz said Burr regularly listens to Senate briefings on covid-19. In 2006, he pushed Congress to draft the Pandemic and All Dangers Preparedness Act (PAHPA), the current U.S. federal government's legal framework for responding to the pandemic.
According to US media, Burr's stock trading records show that he and his wife sold 33 different stocks on February 13, 2020, with a total valuation of between $628,000 and $1.7 million, including shares of two hotel chains worth $150,000. In those weeks, both companies fell sharply in value. He also sold $65,000 worth of Park Hotels & Resorts shares. Burr's data on stock dumps was obtained by the US media through the relevant official asset disclosure mechanism of the US Congress. He reported his February 13 sell-off on Feb. 27.
△ Richard Burr's trade slip
NPR commented that Richard Burr was involved in drafting the U.S. pandemic response framework, but he has never issued a warning of the same degree to the public since February.
On February 7, 2020, Burr wrote in a column on the Fox News website that the United States (in its way of responding to the outbreak) is "better prepared than ever", that Congress has put in place a "legal framework" within which the Trump administration has also "actively responded to covid-19".
Three other senators also sold a large number of shares during Burr's stock sell-off. According to the disclosures, they were Diana Feinstein, a California Democrat and member of the Intelligence Committee, James Inhoff, a Republican in Oklahoma, and Kelly Loveller, a Georgia Republican.
Diana Feinstein and her husband went on a wild sell-off of stocks on January 31, 2020, including $1 million to $5 million in trading on February 18 of that year alone. The deal slip clearly shows that this is stock of Allogene Therapeutics, a California-based biotech company.
Diana Feinstein's trade list
A disclosure report reveals that Mr. James Inkhov sold a large number of shares on January 27, 2020, including shares in PayPal, Apple and real estate company Brookfifield Asset Management, with a total value of $400,000.
△ James Inkhov's trade slip
Kelly Loveller, whose husband Jeffrey Spreecher is also chairman of the New York Stock Exchange, began selling 27 stocks worth millions of dollars starting Jan. 24, 2020. That day, Kelly Loveller said on social media that she attended a Senate briefing on the coronavirus. The shares sold by the couple belong to ExxonMobil, Ross and Auto Zone.
Kelly Loveller's trade orders