Insider Betting? Wall Street Giants Crack Down on Employee Prediction Market Trades
Prediction-market platforms operate as specialised exchanges where users buy and sell contracts based on the outcomes of real-world events ranging from election results to macroeconomic shifts and weather patterns.
Wall Street’s elite financial institutions are quietly rewriting their compliance playbooks to confront the explosive growth of prediction markets. According to sources familiar with the matter, several major investment banks have updated their internal codes of conduct to heavily restrict or outright ban staff from betting on event-based contracts linked to politics and financial markets.
Prediction-market platforms operate as specialised exchanges where users buy and sell contracts based on the outcomes of real-world events ranging from election results to macroeconomic shifts and weather patterns. Driven by mainstream platforms like Kalshi and Polymarket, the sector's exponential growth has triggered widespread regulatory anxieties ahead of key political milestones like the US midterm elections. Now, banking compliance teams are intervening to protect institutional integrity.
Strict Enforcement and Forfeited Gains
Goldman Sachs has taken a proactive stance on the issue. In a recent internal memo, the bank explicitly barred its workforce from trading event-based contracts tied directly to macroeconomic indicators or political races. A source with knowledge of the situation noted that the policy targets activities that could spark “real or perceived conflicts of interest with the bank, its clients or the broader financial industry.”
The enforcement of these new rules carries heavy consequences. According to reporting from Bloomberg News, which initially uncovered the policy shift, repeated violations will face severe disciplinary actions. Offending employees could face immediate termination and may be forced to forfeit any financial returns generated from the illicit trades.
However, the restrictions are not blanket bans on all prediction-based gambling. Sources confirmed that staff are still permitted to wager on non-sensitive, consumer-facing categories such as sports results and entertainment outcomes.
Industry-Wide Compliance Alignment
Goldman Sachs is far from alone in hardening its compliance walls against the prediction boom. Other major institutions are rolling out similar frameworks:
- Bank of America: The firm has barred employees from trading contracts linked to company-specific milestones, macroeconomic figures, and financial services events. A spokesperson for Bank of America confirmed the update, stating that the bank recently provided updates “to more explicitly outline prohibited activities for employees and to offer examples.”
- JPMorgan Chase: The banking giant has extended its existing insider-trading protocols to encompass these emerging platforms. A bank source confirmed that their code of conduct strictly prohibits employees from leveraging any non-public, confidential information to place wagers on prediction markets.
- Morgan Stanley: A person familiar with the firm's internal operations confirmed that its employee code of conduct has similarly been revised to include specific rules addressing prediction market wagers alongside its traditional personal trading and investing policies, though the source declined to elaborate on the specific mechanics of the restrictions.
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