July 9 (Reuters) – Wall Street giants Goldman Sachs and Morgan Stanley have barred employees from trading on prediction-market contracts linked to financial markets and political events, a source familiar with the matter said on Thursday.
A memo was issued some time back for Goldman, in which the policy prohibits staff from participating in event-based contracts that could create real or perceived conflicts of interest with the bank, its clients or the broader financial industry.
Bloomberg News, which first reported the policy, said repeated violations could result in disciplinary action, including termination, and that employees may be required to forfeit gains from prohibited trades.
The restrictions do not apply to prediction-market contracts related to sports and entertainment, the source said.
For Morgan Stanley, the person familiar with the matter said the bank’s code of conduct for employees covers trading and investing topics, including prediction markets.
The person declined to specify the policies related to each market, saying the details are not public.
Prediction-market platforms such as Kalshi and Polymarket have grown rapidly, raising concerns about regulatory oversight ahead of U.S. midterm elections.
(Reporting by Pragyan Kalita in Bengaluru, Saeed Azhar and Tatiana Bautzer in New York; Editing by Maju Samuel)
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