Goldman Sachs Restricts Employee Prediction-Market Trading to Curb Insider Risk

US financial firms including Goldman Sachs and JPMorgan Chase are tightening employee trading restrictions as they respond to insider-trading risks tied to the growth of prediction markets.

CNBC reported on July 9 that Goldman Sachs has adopted internal rules barring employees from trading prediction-market contracts tied to company-related events as well as elections, financial markets, macroeconomic indicators and geopolitical issues. The firm also reaffirmed its existing policy banning all market trading based on material nonpublic information.

The move follows what is believed to be the first insider-trading case involving a private company and a prediction market. In May, the Commodity Futures Trading Commission and the Justice Department charged Google employee Michelle Spagnolo with using nonpublic information on Polymarket to generate about $1.2 million in illicit gains.

Experts say the risk of abuse is rising as prediction markets expand to cover events including corporate earnings, personnel changes and new product launches. Companies are therefore reviewing whether to extend insider-trading rules, traditionally centered on securities trading, to prediction markets.

Morgan Stanley has incorporated prediction-market trading rules into its employee code of conduct, while JPMorgan is urging caution around financially linked prediction-market trades. Bank of America is also revising internal employee policies, CNBC reported.

Prediction-market platforms are also taking steps. Kalshi has introduced employee identity-verification tools and systems linked to corporate compliance programs. Polymarket is working with Chainalysis and Palantir to strengthen monitoring of unusual trading activity.

Legal experts say insider-trading regulation tied to prediction markets remains at an early stage. They advise companies to build their own compliance systems in advance, including trading restrictions and employee education.