Goldman Sachs $GS has updated its personal trading policy to ban employees from wagering on prediction market contracts, according to Bloomberg. Employees at Goldman Sachs are now prohibited from placing prediction market bets on event contracts involving specific companies, electoral outcomes, financial market performance, macroeconomic data, and geopolitics, after the bank revised its personal trading rules, Bloomberg reports. Sports and entertainment bets remain permitted under the policy.
Staff who break the rules more than once could face dismissal or have their accounts shut down, the bank warned. Where a trade is deemed improper, the bank reserves the right to claw back any gains exceeding $200 or direct that sum to a charitable organization. When reached by CNBC, a Goldman representative offered no comment on the specifics of the policy beyond noting that trading on material, nonpublic information is prohibited across every market the bank operates in.
Among the prohibited contract types are bets on whether Goldman will undertake a restructuring within a particular quarter or pursue a corporate acquisition. The policy also names ceasefire timelines in active conflicts, Bitcoin pricing, and the regulatory fate of pending mergers as further examples of off-limits contracts.
By contrast, JPMorgan $JPM Chase issued only a cautionary nudge to its workforce, urging employees to weigh their decisions carefully before trading on financial sector contracts, a stance that falls short of Goldman's outright ban, according to Barron's. Hedge funds Point72 Asset Management and Balyasny Asset Management took a more sweeping approach than Goldman, barring all personal-account prediction market activity for their employees outright.
The Goldman directive comes after what was described as the first event contract insider-trading case involving a private sector company. Federal authorities at the CFTC and DOJ brought charges in May against Michele Spagnuolo, a Google $GOOGL employee, alleging he exploited inside knowledge to place winning bets on Polymarket contracts tied to the company's 'Year in Search' rankings. The CFTC's complaint alleged that Spagnuolo, trading under the username 'AlphaRaccoon,' walked away with roughly $1.2 million in winnings.
Goldman is not alone in grappling with the issue. Among the 50 companies surveyed, just three had formalized rules around prediction market participation, and two more indicated the issue was under active consideration. Morgan Stanley $MS said it has policies in its employee code of conduct. At Bank of America $BAC, internal communications outlining new trading restrictions for employees were being rolled out, a person with knowledge of the situation said.
The insider trading concern around prediction markets has extended to government as well. The White House warned staff against placing bets on prediction markets using nonpublic government information in March, after unusual trading activity in futures markets preceded a public announcement by President Donald Trump about a pause in strikes against Iran.
As recently as January, Goldman's CEO David Solomon publicly called prediction market platforms 'super interesting' and disclosed that he had held meetings with the heads of the two dominant players in the space.