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Banks Tighten Controls Against Insider Trading on Prediction Markets

2 reports · First detected 2026-04-02 · Last active 2026-04-02

Prediction markets allow users to bet on the outcomes of elections, corporate events and other developments. Kalshi and Polymarket have expanded rapidly, with trading volume rising from about $16 billion in 2024 to nearly $64 billion in 2025. Bank employees who trade using nonpublic information about clients, mergers or policy could breach confidentiality obligations and run afoul of fraud and commodities trading rules, making such activity a key compliance concern.

American Banker reported on April 2, 2026, that major U.S. banks were reviewing their rules governing employees’ use of prediction markets. Morrison Foerster partner Ryne Miller recommended setting out explicit restrictions. A separate study examining Polymarket data from February 2024 through February 2026 identified more than 210,000 suspicious wallet-market pairings, increasing scrutiny from the CFTC and the financial industry.

All Coverage

2 original reports
AMERICANBANKER.COM 2026-04-02
Prediction markets offer good clean fun, ethical headaches
AMERICANBANKER.COM 2026-04-02
Are banks safe from insider trading in prediction markets?

The Backstory

The history behind this event
Wall Street Giants Tighten Staff Prediction-Market Rules to Guard Against Insider Trading2026-07-10 · 1 reports · similarity 0.82

Prediction markets such as Polymarket and Kalshi have grown rapidly in recent years, allowing users to wager on event contracts tied to elections, macroeconomic data and other outcomes. Wall Street firms are concerned that employees could trade using nonpublic information, creating insider-trading and reputational risks. Major financial institutions including Goldman Sachs, Morgan Stanley and Bank of America have therefore tightened internal compliance oversight to prevent staff from profiting from privileged information.

As of mid-July 2026, Goldman Sachs had explicitly barred employees from trading event contracts involving the bank, financial markets, macroeconomic developments, elections and geopolitics. Bank of America and Morgan Stanley also moved to tighten their rules. The precautions followed a case uncovered by U.S. authorities in May 2026 involving a software engineer suspected of using nonpublic information to make $1.2 million on Polymarket, prompting Wall Street firms to swiftly introduce restrictions including disciplinary action and profit clawbacks.

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