Goldman Bans Employees From Prediction Market Trades
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- Goldman Sachs has banned its employees from trading prediction-market contracts tied to bank-specific events, elections, financial markets, macroeconomic data and geopolitics, according to people familiar with the policy.
- Michele Spagnuolo, a Google employee, was charged in May by the CFTC and DOJ with using material, nonpublic information to trade Polymarket contracts on Google's browser "Year in Search" lists, allegedly netting about $1.2 million under the handle "AlphaRaccoon."
- Of 50 companies contacted by CNBC, only three (Goldman, JPMorgan and Morgan Stanley) disclosed prediction-market trading policies, two said they were reviewing, 36 didn't respond, and United Airlines told CNBC it has no explicit policy despite broader insider-trading rules.
- JPMorgan told CNBC it urges employees to use caution on prediction markets, especially financial-sector contracts; Morgan Stanley said its employee code of conduct addresses the platforms; Bank of America is rolling out new written guidance with examples.
- Kalshi rolled out employment-verification tools in early June, partnered with StarCompliance for employer access to employee trades, and in February hired Solidus Labs for market-integrity monitoring, while Polymarket works with Chainalysis and Palantir on suspicious-activity surveillance for sports markets.
- Legal experts including Pillsbury's David Oliwenstein, Washington & Lee's Karen Woody and Smarsh's Tiffany Magri argued companies must move beyond blanket insider-trading language and explicitly name prediction markets, noting the CFTC still has a "blank canvas" on enforcement.
- Lawyers from King & Spalding recommended firms update insider-trading policies to cover event contracts and monitor markets tied to their businesses; San Francisco State's John Sullivan went further, urging bans on company-owned devices and during work hours.
Why it matters: Prediction markets have exploded in scope, and any employee with nonpublic information — from Gemini release dates to macro data to headcount — now has a tradeable asset to bet on. Banks are moving first because of their compliance machinery, but with 36 of 50 surveyed companies silent and only three policies public, the next headline case like Spagnuolo's could land at a firm that never updated its handbook.
