(Fortune Daily) The Federal Reserve will ban policy makers and other senior officials from buying individual stocks and bonds and will also restrict active trading after an ethics scandal led to the departure of two regional presidents and undermined confidence in the central bank.
Under the new policies, senior Fed officials—including regional bank presidents, Washington governors and senior staff—will be limited to purchasing diversified investment vehicles such as mutual funds, the central bank said in a statement Thursday.
Other rules “to help guard against even the appearance of any conflict of interest in the timing of investment decisions” include providing 45 days’ advance notice for buying and selling securities, obtaining prior approval for such transactions and holding investments for at least one year. Additionally, “no purchases or sales will be allowed during periods of heightened financial market stress,” the Fed said.
“These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Fed Chair Jerome Powell said in the statement.
The 12 regional Fed presidents will be required to publicly disclose financial transactions within 30 days, a policy that already applies to Washington-based governors and senior staff, the Fed said.
The announcement comes after Powell ordered a system-wide review of ethics rules and also asked the Fed inspector general to take a look at the trading of “certain senior officials.”