The Fed's watchdog is looking into whether officials' multimillion-dollar stock trades broke the law - after Elizabeth Warren piled on the pressure

• The Fed's independent watchdog will look into whether officials' broke the law with their trading activities.
• It comes after Elizabeth Warren piled on the pressure, calling for a probe into possible insider trading.
• Bloomberg reported that Vice Chair Clarida moved $1 million or more into stocks just as coronavirus hit in March 2020.

The Federal Reserve has called in the independent Office of Inspector General to determine whether financial trades made by top officials in 2020 may have broken ethics rules or even the law.

It comes after Bloomberg reported that Fed Vice Chair Richard Clarida shifted between $1 million to $5 million from a bond fund into an equity fund in February that year. He made the move a day before Chair Jerome Powell told the public that coronavirus posed "evolving risks to economic activity," seen as signaling an interest-rate cut.

The Fed has faced questions over conflict of interest in recent weeks around stock trades by top officials.

Sen. Elizabeth Warren piled the pressure on the Fed on Monday, writing the the Securities and Exchange Commission to demand a probe into possible insider trading by Clarida, as well as by Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan.

The Fed has now called in the Office of Inspector General, an independent oversight authority that conducts audits and investigations into the central bank and its actions.

"As part of our comprehensive review, we began discussions last week with the Office of Inspector General for the Federal Reserve Board to initiate an independent review of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law," a Fed spokesperson said late Monday, Reuters reported.

"We welcome this review and will accept and take appropriate actions based on its findings."

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The scandal kicked off in early September when financial disclosures from the Fed's regional presidents showed that some top officials had made multimillion-dollar stock trades in 2020, when the US central bank was taking a huge role in directing and defending the economy.

Boston Fed's Kaplan made multiple trades worth $1 million or more in companies such as Apple and Amazon. Dallas Fed's Rosengren traded in property vehicles. Both resigned last week, with Rosengren citing health concerns.

A Fed spokesperson speaking on behalf of Clarida portrayed his portfolio shift as a scheduled move checked by its standards process.

"Vice Chair Clarida 's financial disclosure for 2020 shows transactions that represent a pre-planned rebalancing to his accounts," Fed spokesperson speaking on behalf of Clarida told Bloomberg, adding: "The selected funds were chosen with the prior approval of the Board's ethics official."

The Fed launched an internal review of its ethics rules in September, but the Bloomberg report and Sen. Warren's statements turned up the heat on the central bank.

"The reports of this financial activity by Fed officials raise serious questions about possible conflicts of interest and reveal a disregard for the public trust," Warren said.

"If they involved 'purchasing or selling a security while in possession of material nonpublic information' … they may have violated SEC's insider trading rules," she added.

Insider contacted the Federal Reserve for comment, although outside of normal office hours.