According to CNBC on July 9, citing people familiar with the matter, Goldman Sachs and JPMorgan have banned their employees from trading prediction market contracts related to certain events, elections, financial markets, macroeconomic data, and geopolitical forecasts for their bank’s specific events. The move came after Google employees were accused of using internal Google data to trade on Polymarket, with profits of about $1.2 million.
Michele Spagnuolo case: Google employee insider trading profits $1.2 million
According to the CFTC’s complaint, Google employee Michele Spagnuolo used an “AlphaRaccoon” account to trade event contracts on Polymarket related to Google’s “annual search rankings.” The allegation is that she used material nonpublic information (MNPI) to profit about $1.2 million. The case is the first instance, to date, of an insider-trading prosecution involving event contracts tied to a private company, jointly brought by the CFTC and the Department of Justice in May 2026.
Legal experts noted that prediction platforms cover a vast number of contract types, with many potential avenues for misuse of MNPI: company employees could trade using internal data tied to contracts involving things like the number of employees at their company, product launches, or the company’s future direction—creating a “whack-a-mole” insider-trading problem that is difficult to track comprehensively.
Contract policy status at major financial institutions such as Goldman Sachs, Morgan Stanley, and JPMorgan
According to CNBC’s report, the responses by major financial institutions are as follows:
Goldman Sachs: It has banned employees from trading prediction market contracts related to specific events, elections, financial markets, macroeconomic data, and geopolitical forecasts. A Goldman Sachs representative declined to comment on the policy but said it bans the use of material nonpublic information in “all markets” trading.
Morgan Stanley: A spokesperson said it has established prediction market trading policies in its employee code of conduct, without disclosing additional details.
JPMorgan: According to Barron’s, the company has urged employees to act cautiously when trading prediction markets, especially when the contracts are related to the financial industry.
Bank of America: It is updating its policies to clearly spell out prohibited employee conduct and provide examples.
United Airlines: There is no explicit prediction market trading policy, but employee guidelines prohibit using company confidential information obtained through one’s position to pursue personal gain.
FAQ
Why have financial institutions like Goldman Sachs begun to develop insider-trading policies related to prediction markets?
According to reports, the key triggers were the May 2026 indictment by the CFTC and the Department of Justice of Google employee Michele Spagnuolo. This is the first insider-trading prosecution involving event contracts tied to a private company. Legal experts said that because prediction market contracts come in many forms, they provide a new channel to profit from material nonpublic information. As more cases are prosecuted, companies that do not adopt adequate policies may face potential liability risk.
What is the current state of the CFTC’s regulation of insider trading in prediction markets?
According to Karen Woody, a law professor at the University of Washington and Lee University, the CFTC has “a blank slate” in fighting insider trading in prediction markets, with very few cases so far—the area remains largely new. The CFTC did not respond to CNBC’s questions about whether companies could be held responsible for employees’ insider trading. The precise regulatory direction will be based on the CFTC’s official announcements.
What anti-insider-trading measures have Kalshi and Polymarket themselves taken?
According to reports, Kalshi launched an employment verification tool in June 2026 and partnered with StarCompliance to allow employers to review employee trading records; in February, it also established a partnership with the market integrity company Solidus Labs. Polymarket, meanwhile, partnered with Chainalysis for on-chain monitoring and with Palantir to monitor suspicious activity involving sports-related contracts. Legal counsel said these are only first steps, and companies should not rely on the platforms themselves to prevent insider trading—they need to train employees and set policies.
