New York Fed's Dudley Investigated, Cleared Over Wells Fargo Disclosure

By Michael S. Derby Features Dow Jones Newswires

Federal Reserve Bank of New York President William Dudley was investigated this year for failing to disclose a relative's employment at Wells Fargo & Co. and was cleared of any wrongdoing, the regional Fed bank said Friday.

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The New York Fed said Mr. Dudley noticed in April an "unreported position" related to a sibling and Wells Fargo, as part of the annual process of disclosing his financial interests as required by law. Mr. Dudley's half-sister was a product management executive for the financial firm, the New York Fed said.

The New York Fed said Mr. Dudley "identified and recognized his omission and immediately notified" bank leadership. That disclosure triggered an investigation. The New York Fed said an external law firm reviewed his tenure at the regional Fed bank for any "potential conflicts of interest" related to Wells Fargo.

The law firm completed its review in July. It found the failure to disclose the connection was "inadvertent," and found no sign that the Wells Fargo connection affected any of his activities. It noted that Mr. Dudley hadn't participated in any decision-making regarding Wells Fargo.

Mr. Dudley joined the New York Fed, which serves as the central bank's point of contact with financial markets, in 2007 and became its president in 2009. He also serves as vice chairman of the interest-rate-setting Federal Open Market Committee, and is an influential voice on monetary policy issues. He worked as Goldman Sachs's chief economist before joining the Fed.

Mr. Dudley said in a statement released by the bank that "although my failure to disclose my sister's place of employment was inadvertent, I deeply regret this omission and am embarrassed by my failure to read these important disclosures more thoroughly."

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New York Fed board of directors Chairwoman Sarah Horowitz said in a statement that "we felt that given Bill's position it was appropriate for us to bring in an outside firm to conduct a thorough review. We are satisfied with the review's findings."

The bank also said that had Mr. Dudley disclosed the connection when he was required to, it wouldn't have required any waivers or recusals. The New York Fed statement also said the oversight was a breach of the bank's code of conduct, and wasn't a violation of government ethics law.

The bank said Mr. Dudley was counseled on his disclosure obligations. Meanwhile, the bank's chief ethics officer was asked to help New York Fed employees better understand their reporting requirements.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

September 01, 2017 14:23 ET (18:23 GMT)