Prediction platform sparks concerns over corporate insider trading, as major financial institutions move to draft internal safeguards

On July 9, CNBC reported that the prediction market is developing particularly fast right now, but the risk of insider trading is also increasing. Many companies are currently paying attention to this issue and have begun updating relevant rules to protect the interests of the company and its employees.

Goldman Sachs has already taken clear action: employees are not allowed to participate in contract trading related to banks, elections, financial markets, macroeconomic data, and geopolitics.

The case dates back to May this year. At that time, the U.S. CFTC and the Department of Justice accused Google employee Michele Spagnuolo of using inside information to trade contracts related to Google’s “annual search” rankings on the Polymarket platform, earning $1.2 million in profit.

The variety of contracts on prediction platforms also provides new avenues for profiting from nonpublic information. Law professor Karen Woody noted that because prediction platforms allow betting on a wide range of content, regulators find it difficult to comprehensively monitor whether someone is abusing confidential information.

CNBC recently contacted 50 publicly listed and private companies that have related contracts on prediction market platforms. The results showed that only 3 have developed policies regarding prediction market trading, while another 2 said they are urgently reviewing.

Lawyers noted that as insider trading cases increase, companies must quickly improve their policies and strengthen employee training; otherwise, employee violations could bring joint liability to the company.

Not only are companies taking action, the major prediction market platforms are also trying to crack down on insider trading. For example, Kalshi launched an employee verification tool in early June and partnered with StarCompliance so employers can monitor employees’ trading records on event contracts.

What’s more, Polymarket has also partnered with Chainalysis and Palantir, aiming to jointly focus on monitoring the trading activity of suspicious event contracts in order to maintain fairness in prediction platform trading.

#预测平台 #Insider trading