A former U.S. Federal Reserve official, Adriana Kugler, is facing an ethics inquiry after stock trades she carried out while in office triggered red flags within the central bank’s own compliance system. According to reporting from the Financial Times, senior Fed officers declined to approve the transactions she disclosed, prompting a formal review of whether they breached internal ethics rules.

Kugler resigned from the Fed in August, at a time when the institution was already under pressure to tighten standards around personal investing by policymakers and senior staff. The internal inquiry will examine the timing, size and nature of her trades, and whether they were compatible with guidelines intended to prevent officials from profiting from sensitive, market-moving information.

The Federal Reserve declined to comment on the specifics of the case, citing confidentiality around personnel matters, but reiterated that it expects all officials to adhere strictly to its strengthened code of conduct. In recent years, the Fed has barred most trading in individual stocks by senior figures, encouraged the use of diversified funds, and imposed longer minimum holding periods.

For markets, the case underscores how central banks are still dealing with the reputational fallout from past trading scandals involving regional Fed presidents and staff. Even if no laws were broken, any perception that insiders might benefit from their roles can damage public trust in interest-rate decisions and financial stability policy.

The inquiry into Kugler will feed into a wider debate about how far conflict-of-interest rules should go for top economic officials in the U.S., especially as they oversee aggressive rate cycles, crisis interventions and market backstops. Investors will be watching not only the outcome of this case, but whether it triggers another round of rule tightening at the Fed.