Prediction Market Bets Amplify Rumor-Fueled Risks for Companies

Matt Gehl’s commentary was featured in a Bloomberg Law article discussing the rise of prediction markets and emerging corporate measures to address potential insider trading risks.

As prediction markets gain traction, some S&P 500 companies are beginning to incorporate related guidance into their insider trading policies or codes of conduct. Insider trading policies typically focus on the misuse of material nonpublic information in securities trading, while codes of conduct often more broadly prohibit employees from using confidential information for personal gain.

Matt noted that although many existing policies may implicitly cover prediction market activity, the language is not always explicit.

“You can find provisions in a lot of policies that you could, in a sense, interpret to cover prediction markets,” Matt said. “But being more explicit isn’t a bad idea.”