Wall Street Banks Curb Employee Activity on Prediction Platforms

Goldman Sachs now prohibits staff from trading contracts linked to financial markets, political elections, and macroeconomic data, specifically targeting subjects that could conflict with the bank’s interests. While employees retain the ability to wager on sports and entertainment, violations of these new rules carry the threat of disciplinary action or the forfeiture of profits. Other major firms, including Morgan Stanley, Bank of America, and JPMorgan Chase, have either updated their codes of conduct or clarified existing policies to explicitly cover event-based contracts.

The regulatory pressure intensified following a federal case involving a Google software engineer, Michele Spagnuolo. Prosecutors allege Spagnuolo leveraged internal search trends to secure $1.2 million in profits on Polymarket before the information became public. This incident highlighted a vulnerability where employees might exploit non-public data that falls outside traditional securities regulations. Consequently, the House Oversight Committee has begun requesting records from platforms like Kalshi and Polymarket to investigate suspicious activity, including allegations regarding the use of classified military information for financial gain. While some researchers warn that overly restrictive bans might diminish the accuracy of these markets, the industry is increasingly moving toward mandatory disclosures and independent surveillance committees to manage the influx of sensitive corporate and political data.