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Fed officials Kaplan, Rosengren to sell all stocks by Sept. 30

Boston Fed Dhief Eric Rosengren and Dallas Fed President Robert Kaplan will sell all individual stocks amid ethic concerns over trading activity in 2020. Yahoo Finance's Brain Cheung shares the details.

Video Transcript

JULIE HYMAN: I want to turn now to the Fed. And that means it's Brian Cheung's department because we are hearing about some various Fed presidents who recently made disclosures about their stock holdings. Now it looks like they're going to sell some of those individual holdings because there were some eyebrows raised, shall we say, Brian, about what they were owning.

BRIAN CHEUNG: Yeah, absolutely. A lot of backlash, especially on the Twittersphere, about the stock trading that was done by a number of Fed presidents, the highest profile one being from the Dallas Fed, where Robert Kaplan made a number of $1 million-plus trades over the course of 2020. You can see the companies and the ETFs that were covered in there, including Verizon, our former parent company. You can see Facebook, Chevron, Alibaba. Again, these were purchases and sales over $1 million in size.

The Boston Fed President Eric Rosengren had also made some transactions in real estate investment trusts. And we got statements from both the Boston and the Dallas Fed yesterday that had nearly identical language. They both said that the presidents would sell the individual stocks that they owned by September 30, the end of this month, and then reinvest those proceeds in diversified index funds or cash savings.

They also committed to no more trading in those accounts for as long as they serve in those roles. They did all of this to avoid even the appearance of an ethical violation, although they noted that they did comply with the rules at those reserve banks.

It should be noted that the policies at these quasi-private institutions, because again, they're not necessarily direct arms of the federal government-- the Federal Reserve Board of Governors in DC more directly has ties to the federal government. Those rules at the Fed board are a bit more stringent than at the reserve banks.

And it's also to be noted that the reserve bank presidents oftentimes make more money than those working as Federal Reserve governors or even the Fed chair. But obviously, it seems like this is just a way for the Boston and Dallas Fed presidents to try to get over the public relations issues that came with these disclosures. Although of course, it'll be interesting to see if maybe Fed Chairman Jay Powell gets a question on that when the Fed comes out of its blackout period next week into that September 22 meeting and press conference, guys.

JULIE HYMAN: Very interesting. Yeah, [GARBLED AUDIO]

--if he does get that question. Maybe you can ask him, Brian, the next time you have the opportunity.