The Federal Reserve announced new trading rules for policymakers and senior staff on Thursday in order to prevent the appearance of a conflict of interest.
The new restrictions will prohibit employees from buying individual stocks, holding investments in individual bonds or agency securities and entering into derivatives.
They will also have to provide 45 days' notice before buying or selling securities, receive prior permission to conduct transactions and hold investments for at least one year. No transactions will be allowed during periods of heightened market volatility.
These tough new rules raise the bar high in order to assure the public that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve Board, said Federal Reserve Board Chairman Jerome Powell.
The announcement comes hours after Sen. Elizabeth Warren, D-Mass., made the announcement. asked Powell to release an email that was sent on March 23, 2020 to officials, warning them to avoid trading for their personal accounts while the central bank moved to rescue the economy in the early days of the pandemic.
The existence of the email was reported by The New York Times, citing a person who saw the message.
Last month, two regional Fed heads, Eric Rosengren, president of the Federal Reserve Bank of Dallas, and Robert Kaplan, president of the Federal Reserve Bank of Boston, announced their retirements after financial disclosures showed they bought and sold stocks while the Federal Reserve came to the rescue of the U.S. economy in March 2020.
Neither man broke any rules, but the trades caught the attention of lawmakers who noted there appeared to be a conflict of interest. Rosengren retired officially due to health concerns.
Earlier this week it was reported that Powell sold up to $5 million of stock last year before the market slid nearly 6% in October. Like his colleagues transactions, Powell did not break any rules.