Wall Street Banks Restrict Employee Trading on Prediction Markets Over Insider‑Info Risks

TL;DR

• Wall Street banks are tightening rules for their employees on prediction markets over fears they may trade using insider information.
• Goldman Sachs banned its staff from trading event contracts tied to the bank, financial markets, elections, and geopolitics.
• Polymarket applied for regulatory approval to offer margin trading in the U.S. and recorded a record $713 million in daily volume.

The major Wall Street banks have tightened their internal policies to prevent or limit their employees from trading on prediction market platforms such as Polymarket and Kalshi.

The central concern is that staff could use non-public information to profit from event contracts, which would constitute a classic insider trading scheme transposed onto a new type of market.

Banks Keep a Close Eye on Their Employees

As reported by CNBC citing internal sources, Goldman Sachs banned its employees from trading event contracts related to the bank, financial markets, elections, and geopolitics. Morgan Stanley also has policies in place, and Bank of America confirmed it was in the process of implementing new restrictive measures for its staff.

Wall Street Confronts the Problem of Inside Knowledge

The banks are responding to a pressing context. In May, the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) indicated that Google software engineer Michele Spagnuolo obtained $1.2 million on Polymarket by trading with privileged information he accessed through his work environment. The case heightened doubts about how corporate access to sensitive data can translate into undue advantages on these platforms.

Congress also weighed in on the issue. On June 18, Wisconsin Representative Bryan Steil introduced a bill to ban certain public officials from betting on public policy decisions and political outcomes. The most prominent precedent dates back to January, when a soldier reportedly earned more than $400,000 by betting on the removal of Venezuelan President Nicolás Maduro, who was ousted by U.S. forces.

Polymarket Seeks Regulatory Certainty to Expand

Meanwhile, Polymarket is seeking to expand its presence in the U.S. The platform filed an application with the National Futures Association to register its affiliate Coming Home GBA LLC as a futures commission merchant, which would allow it to offer margin trading.

Its main rival, Kalshi, has held that authorization since March. Polymarket also recorded a $713 million daily volume record in June, driven in part by the start of the FIFA World Cup. Kalshi, for its part, reached a monthly record volume of nearly $9.4 billion in June, with the same tournament serving as the primary driver.