Federal Reserve watchdog finds gaps in insider-risk controls

The Federal Reserve’s internal watchdog found that the central bank’s controls were not sufficient to proactively identify and manage insider risks to sensitive economic information and other assets.

The finding appears in Board Report 2026-MO-B-010R, “The Board Needs a More Robust Insider Risk Management Program,” issued July 15, 2026. The report was released the same day the Justice Department announced that former Federal Reserve senior adviser John Harold Rogers had been sentenced to 38 months in federal prison in a case involving restricted Federal Reserve information.

What the inspector general found

The Federal Reserve Office of Inspector General said the Board’s insider-risk management activities did not proactively or effectively identify and manage risks to the agency’s information and assets. The OIG said the activities were not consistent with leading practices and identified a maturity gap compared with a peer federal financial regulatory agency.

The watchdog identified five principal gaps:

• No process for identifying the Board’s critical assets.
• No centralized insider-risk program to proactively identify and manage threats at the enterprise level.
• Insufficient procedures for timely internal information sharing, including information shared with the Federal Reserve System.
• No consistent, enterprise-level policies and procedures for incident response and reporting.
• No insider-risk training requirement for all Board staff.

The OIG issued nine recommendations intended to create a more robust insider-risk management program. In its response to the draft report, the Board concurred with the recommendations and outlined actions to address each one. The OIG said it will follow up to determine whether the recommendations are fully addressed.

Why Federal Reserve information matters

The Board holds proprietary economic information, including restricted, nonpublic material related to monetary policy and the Federal Open Market Committee. Advance access to such information could be valuable to traders, foreign governments and others seeking insight into U.S. interest-rate decisions and the broader direction of the economy.

The OIG said foreign adversaries have an interest in the Board’s proprietary information because risks to that information could undermine U.S. competitiveness and potentially harm the U.S. economy. The report identifies weaknesses in management controls; it does not establish that current Federal Reserve information is being actively compromised or that a specific ongoing foreign operation is underway at the Board.

The review focused on the Board’s governance and management of its insider-risk activities, along with information sharing and coordination between the Board and the Federal Reserve System. The OIG said it did not assess insider-risk activities conducted by the individual Federal Reserve Banks.

The Rogers case

Rogers, 64, was sentenced in federal court to 38 months in prison and 12 months of supervised release. A federal jury found him guilty on Feb. 3, 2026, of making false statements to investigators from the Federal Reserve Board’s Office of Inspector General.

According to the Justice Department, Rogers worked as a senior adviser in the Board’s Division of International Finance from 2010 through 2021. Court papers described him as having access to restricted, nonpublic information about monetary policy and the Federal Open Market Committee.

The Justice Department said the case involved Rogers sharing restricted Federal Reserve information with Chinese intelligence operatives and then lying to investigators about those disclosures. The department said he sent sensitive material to personal accounts and shared information with people connected to China’s intelligence services.

Rogers was convicted of making false statements, not espionage. The criminal case and the OIG’s management review are related in timing and subject matter, but they are distinct: the sentencing concerns Rogers’s proven criminal conduct, while the audit addresses weaknesses in the Federal Reserve Board’s internal controls.

What to watch next

The key accountability question is whether the Federal Reserve completes the actions it outlined in response to the OIG’s nine recommendations.

Those actions could include a formal process for identifying critical information and assets, stronger enterprise-level governance, consistent incident-response and reporting rules, improved information sharing and mandatory insider-risk training for staff.

The OIG said it will conduct follow-up work. Until that oversight is complete, the public record shows a control system the watchdog found insufficient, a set of recommended corrective actions the Board accepted, and no final finding in this report that current Federal Reserve information is being actively compromised.

Sources

• Federal Reserve OIG: The Board Needs a More Robust Insider Risk Management Program
• U.S. Department of Justice: Former Adviser to Federal Reserve Board of Governors Sentenced
• Bloomberg Law: Fed’s Watchdog Warns on Insider Risk After China Secrets Case

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