Banks Tighten Controls Against Insider Trading on Prediction Markets
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 reportsThe Backstory
The history behind this eventPrediction Market Boom Pushes Wall Street to Tighten Trading Controls
Prediction markets operated by platforms including Kalshi and Polymarket let users trade contracts tied to elections, economic data and corporate developments, turning views on real-world events into direct financial exposure. Their expansion into mainstream finance is testing compliance systems built largely for securities. Employees who trade using material nonpublic information may face insider-trading, misappropriation or market-manipulation liability, while firms can struggle to capture such activity through conventional personal-account monitoring.
Goldman Sachs barred employees on July 9, 2026, from trading prediction contracts linked to financial markets and political events, with repeated breaches potentially leading to dismissal and forfeiture of gains. Point72 Asset Management and Balyasny Asset Management have also restricted staff trading. Kalshi said on June 9 that it would collect employment details in higher-risk markets; the platform said its screening had blocked at least 100 potential insider trades and generated at least 20 referrals to law-enforcement or securities regulators.
Wall Street Giants Tighten Staff Prediction-Market Rules to Guard Against Insider Trading
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.
Subscribe to Mark Radar Weekly
Every Friday, the week's strongest signals in your inbox. Unsubscribe anytime.
If you search news on Google, you can set Mark Radar as a preferred source—our coverage will show up more often in your results. Set as preferred source on Google →