Wall Street banks, including Goldman Sachs and Morgan Stanley, are restricting employee prediction market trades as insider trading fears spread across Polymarket and Kalshi.
Wall Street banks are restricting employee trading on prediction market platforms due to fears that they may use nonpublic information to trade event contracts.
Goldman Sachs has reportedly banned its employees from trading on event contracts that are specific to the bank, including financial markets, macroeconomic events, elections and geopolitics, CNBC reported, citing people familiar with the matter.
Unidentified sources from Morgan Stanley also told CNBC that the bank has policies regarding prediction market trading by employees, while a spokesperson for Bank of America said the bank was in the process of issuing new prohibitive measures for employees on prediction market trading.
The report adds to insider trading fears regarding prediction markets, which have attracted the attention of the White House and US lawmakers, who proposed legislation aimed at restricting political prediction market trading by government officials.
Cointelegraph approached Goldman Sachs to ask what triggered the preventive policies. A spokesperson for the bank declined to comment.
In May, the US Justice Department and the Commodities Futures Trading Commission (CFTC) said that Google software engineer Michele Spagnuolo profited $1.2 million on Polymarket after accessing nonpublic information at work.
On June 18, Wisconsin Representative Bryan Steil introduced a law to prevent certain public officials from “wagering on public policy issues and political outcomes,” but didn’t mention any White House officials by name.
One major flashpoint arose in January, when a soldier allegedly made more than $400,000 betting on the removal of Venezuelan President Nicolás Maduro, who was ousted and captured by US forces.
Related: Suspected insider wallets rack up $1.2M betting on ZachXBT’s Axiom exposé
Meanwhile, Polymarket is seeking regulatory approval to offer margin trading for US users, which would enable them to bet on events with less capital upfront.
The prediction market filed an application to become a futures commission merchant through its affiliate, Coming Home GBA LLC, according to a July 3 filing with the National Futures Association (NFA).
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