The Board Can Further Enhance the Design and Effectiveness of the FOMC’s Investment and Trading Rules

Submitting OIG:

Federal Reserve Board & CFPB OIG

Date Issued:

Wednesday, April 26, 2023

Agency Reviewed / Investigated:

Board of Governors of the Federal Reserve System

Submitting OIG-Specific Report Number:

2023-SR-B-006

Location(s):

Agency-Wide

Type of Report:

Inspection / Evaluation

Questioned Costs:

Funds for Better Use:

Number of Recommendations:

View Document:

Attachment	Size
board-FOMC-investment-trading-rules-apr2023.pdf	1.54 MB

Recommendation Number	Recommendation Status	Significant Recommendation
3	Open	No
We recommend that the Board chair or a designee develop a plan for how to further enhance uniformity across the System’s financial disclosure report review process, including considering additional controls and guidance.
5	Open	Yes
We recommend that the Board chair or a designee develop a process to verify the accuracy of the information on financial disclosure reports for individuals subject to the Investment and Trading Policy. As part of this effort, a. require covered individuals to provide brokerage statements to their respective ethics officer for all accounts with holdings and transactions reported on their annual financial disclosure report. b. update financial disclosure review guidance to include the use of employee-provided brokerage statements to check annual financial disclosure reports for accuracy and completeness.
6	Open	No
We recommend that the Board chair or a designee develop an approach to verify the accuracy of the information on financial disclosure reports for individuals who have access to confidential Class I FOMC information and are not covered by the Investment and Trading Policy. As part of this effort, a. determine the method and frequency for checking the accuracy and completeness of financial disclosure reports against brokerage statements, for example, by conducting periodic random sampling or full reviews. b. update financial disclosure review guidance to include the use of employee-provided brokerage statements to check annual financial disclosure reports for accuracy and completeness and describe the method and frequency of this review. c. assess the costs and benefits of establishing a system to automatically detect prohibited assets or failure to preclear trades using employee-provided brokerage statements and determine whether to implement such an automated approach.

Recommendation Number

Recommendation Status

Significant Recommendation

Additional Details

Open

We recommend that the Board chair or a designee develop a plan for how to further enhance uniformity across the System’s financial disclosure report review process, including considering additional controls and guidance.

Open

Yes

We recommend that the Board chair or a designee develop a process to verify the accuracy of the information on financial disclosure reports for individuals subject to the Investment and Trading Policy. As part of this effort, a. require covered individuals to provide brokerage statements to their respective ethics officer for all accounts with holdings and transactions reported on their annual financial disclosure report. b. update financial disclosure review guidance to include the use of employee-provided brokerage statements to check annual financial disclosure reports for accuracy and completeness.

Open

We recommend that the Board chair or a designee develop an approach to verify the accuracy of the information on financial disclosure reports for individuals who have access to confidential Class I FOMC information and are not covered by the Investment and Trading Policy. As part of this effort, a. determine the method and frequency for checking the accuracy and completeness of financial disclosure reports against brokerage statements, for example, by conducting periodic random sampling or full reviews. b. update financial disclosure review guidance to include the use of employee-provided brokerage statements to check annual financial disclosure reports for accuracy and completeness and describe the method and frequency of this review. c. assess the costs and benefits of establishing a system to automatically detect prohibited assets or failure to preclear trades using employee-provided brokerage statements and determine whether to implement such an automated approach.

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The Board Can Further Enhance the Design and Effectiveness of the FOMC’s Investment and Trading Rules

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