Major US banks have told their employees they risk termination if they make finance- and politics-related prediction market trades, unnamed insiders told news agencies yesterday.
A Reuters article, quoting three sources “familiar with the matter,” identified several of these banks as Goldman Sachs, Morgan Stanley, JPMorgan Chase, and the Bank of America.
Bloomberg, also quoting an unnamed source, reported that Goldman Sachs has warned staffers they could face disciplinary action if they trade financial markets and political event contracts.
The restrictions “do not apply to prediction market contracts related to sports and entertainment,” the source told the same media outlet.
The alleged block comes amid claims of insider trading on platforms like Kalshi and Polymarket. In May, the House Oversight and Government Reform Committee launched an investigation of the operators’ insider trading policies.
Prediction Market Policing: Banks Update Codes of Conduct
The sources said Goldman Sachs told staff of its decision in a recent internal memo. The memo reportedly explained that trading on such contracts could create real or perceived conflicts of interest with Goldman, the bank’s clients, and other financial industry stakeholders,
Goldman allegedly warned its staff that repeat offenders could face disciplinary action. Such action reportedly includes termination, and with employees allegedly “required to forfeit gains from prohibited trades.”
The news agencies did not explain what would happen to any money that staffers are forced to forfeit. Most of the banks refused to comment to Bloomberg or Reuters on the veracity or otherwise of the reports.
However, a Bank of America spokesperson said the bank had recently updated its code of employee conduct. These include more explicit explanations of banned activities for employees, as well as examples, the spokesperson said.
A source close to Morgan Stanley said the firm has updated its code of conduct for employees. The code now reportedly includes new rules for prediction market-related trading, but the source did not provide further details.
An unnamed JPMorgan Chase source said the bank also prohibits staffers from making bets based on non-public or confidential information.
The source said this ban includes trades made on prediction market platforms.
Yet another anonymous source close to Bank of America said the bank has told employees not to trade prediction market contracts related to “company-specific, macroeconomic and financial services events.”
Wall Street Warms to Prediction Market Sector
Despite banks’ apparent reluctance to allow their staff to trade on sensitive prediction-market event contracts, Wall Street seems to be warming to the industry.
Cboe has already launched binary outcome contracts on its own prediction market platform. The likes of Charles Schwab are reportedly poised to launch similar products in the weeks ahead.
And industry experts earlier this month told CasinoBeats that the traditional financial sector’s pivot to prediction markets is “already happening,” with more Wall Street heavyweights looking to move into the sector.
Some, however, appear to be waiting for regulatory clarity as the Commodity Futures Trading Commission continues to trade legal blows with US states.
The Commission says that it alone has jurisdiction over prediction market platforms. States, however, say Kalshi and the like are violating their gambling laws.
