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Fed passes new blanket rules banning officials from most trades

Most of the new rules will go into effect May 1 and officials will have a year to align their personal portfolios, Fed officials told reporters in a Friday morning call.

Starting July 1, officials will also have to provide 45 days notice before buying or selling permitted assets and will be forced to hold their investments for at least a year. Transactions will be subject to prior approval by designated ethics officers and there will be outages during times of market stress, such as spring 2020, Fed officials said.

Regional mutual presidents will also be required to publish their transactions on their respective websites within 30 days.

Notably, officials said penalties for violators will be handled on a case-by-case basis — as will the degree of publicity for those penalties.

The rules come in the wake of trade scandals that rocked the central bank and forced the resignation of three senior officials.

Fed Vice Chairman Richard Clarida announced last month that he was resigning following new questions about his business activity at the start of the pandemic.

Clarida quietly admitted in December that he had not fully disclosed financial transactions in February 2020. The Trump appointee had already come under fire in October for transferring between $1 million and $5 million from a fund bond to an equity fund on February 1. December 27, 2020. It was just a day before Powell signaled that the central bank could act to cushion the economy when the pandemic hit the United States

Clarida’s transactions have come under intense scrutiny after Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren came under fire last year for disclosures according to which they had bought and sold stocks and property-related assets in 2020, as the central bank engaged in a broad rescue of financial assets. markets. Both men resigned a few weeks after the firestorm.

The Fed Inspector General is investigating the business activities of officials, and Sen. Elizabeth Warren (D-Mass.) — a banking committee member who has called for Powell not to be reappointed as central bank chairman — has asked the Securities and Exchange Commission to look into the matter.

Separately, lawmakers like Sen. Jon Ossoff (D-Ga.) and Rep. Alexandria Ocasio-Cortez (DN.Y.) have proposed new rules to restrict exchanges that would require members of Congress to dispose of or place their assets in blind trusts managed by third parties.

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