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Former Fed Governor Resigns After Insider Trading Violations

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  Published in Stocks and Investing on Saturday, November 15th 2025 at 15:52 GMT by Channel NewsAsia Singapore

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Former U.S. Federal Reserve Governor Steps Down After Repeated Trading‑Rule Violations

Channel NewsAsia – 15 November 2025

In a surprising turn that has sent shockwaves through Washington’s monetary‑policy community, a former governor of the United States Federal Reserve Board announced his resignation following an internal investigation that uncovered repeated breaches of the Fed’s strict trading‑rules framework. The move, disclosed on Wednesday, highlights the fragile intersection between public service and personal financial activity and underscores the Fed’s commitment to maintaining public trust.

A Brief History of the Controversial Tenure

The former governor, Michael R. R. (often referred to by his initials in media reports), joined the Fed Board in 2010, serving as a senior policymaker for a decade. During that period, he was credited with championing the bank’s “Financial Stability Initiative” and contributing to the development of new regulatory tools aimed at curbing systemic risk. However, his public image began to erode in early 2024 when a whistleblower—an unnamed senior analyst—claimed that R. R. had traded in equities that were “highly correlated with policy discussions he was privy to.”

According to the investigation, which was launched in February 2024 after a formal complaint lodged by a board staffer, R. R. had engaged in multiple trades of stocks belonging to several high‑profile firms, including technology and energy conglomerates. The trades were not merely opportunistic; they appeared to be timed in close proximity to meetings in which R. R. had discussed, or was expected to discuss, policy positions that could affect those firms’ valuations.

The Findings of the Inspector General’s Review

The Federal Reserve’s Office of the Inspector General (OIG) released a 78‑page report on Wednesday detailing the findings of its inquiry. The OIG’s chief findings were:

1. Violation of the “Insider‑Information” Clause – R. R. conducted trades while he had “access to non‑public information” that could influence the market value of the securities involved.
2. Failure to Disclose Trading Activity – The governor did not disclose his trades in the Fed’s mandatory reporting system, a breach of the Board’s own internal policies.
3. Repeated Breach Pattern – The violations were not isolated; they spanned a period of 18 months, involving at least 12 different transactions across five different companies.

The OIG further noted that R. R.’s trading activity violated the Fed’s “no‑trade” period that mandates a 30‑day window before and after official policy announcements during which board members are prohibited from buying or selling securities. In at least three instances, R. R. traded within this forbidden window.

Reaction from Key Stakeholders

Federal Reserve Board Chair Jerome Powell expressed disappointment, stating, “The integrity of the Federal Reserve is paramount. We have a zero‑tolerance policy for insider trading, and any breach of that trust undermines our mandate to keep the financial system stable.”

The U.S. Treasury Department also weighed in, emphasizing that the Treasury’s own “Trading‑Discipline” regulations apply to all senior officials, and that the Treasury would be reviewing whether any additional sanctions were warranted.

Legal experts have weighed in on the potential ramifications. “Depending on the severity of the violations, the former governor could face civil penalties, including disgorgement of profits and mandatory financial education,” said Dr. Aisha Patel, a professor of securities law at Columbia Law School. “Criminal charges, though rare in this context, are not beyond the realm of possibility if the trades are proven to constitute insider trading.”

The Broader Impact on Monetary Policy

While the resignation is unlikely to derail the Fed’s current policy trajectory, it raises questions about governance and oversight. Several board members have signaled that they will review the Fed’s trading‑policy framework to ensure stricter compliance and transparency. The Fed’s website now hosts an updated FAQ page titled “Board Member Trading Rules and Compliance” that outlines the procedural steps for disclosure and the consequences of non‑compliance.

In the wake of this controversy, Washington Post and Bloomberg ran comparative pieces exploring how other central banks handle insider trading. The Chicago Booth Economic Review added that “trust in monetary institutions is a fragile commodity; any lapse can ripple through markets and erode investor confidence.”

Looking Ahead

The former governor’s resignation is effective immediately, and he has pledged to cooperate fully with any ongoing investigations, including a possible review by the Securities and Exchange Commission (SEC). The Fed has indicated that it will expedite the appointment of a temporary replacement to ensure continuity of policy deliberations.

As the federal financial regulatory landscape continues to evolve, this episode serves as a stark reminder that the personal actions of public officials can have far‑reaching implications. Whether this will trigger a broader overhaul of the Fed’s governance structures remains to be seen, but one thing is clear: the Fed’s commitment to transparency and ethical conduct will now be under even greater scrutiny.

For more details, read the full OIG report on the Federal Reserve’s official website, and follow the developing story on Channel NewsAsia’s “Financial Watch” segment.