Prediction Market “Insider Trading” Revisited: Technology Employee Charged With Using Confidential Corporate Information to Profit from Event Contracts
On May 27, 2026, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) and the Commodity Futures Trading Commission(“CFTC”) charged a Google software engineer with allegedly using confidential internal search data to profit from prediction market contracts on Polymarket. The case is the latest example of regulators applying insider trading-style theories outside traditional securities markets and raises important questions regarding confidential business information, prediction markets, and the scope of the CFTC’s enforcement authority.
For companies, the matter underscores increasing scrutiny of trading activity involving confidential corporate information and the need to assess whether existing insider trading and confidentiality policies adequately address emerging trading platforms.
Read the full blog post for an analysis of the allegations, the implications of United States v. Chastain, and key compliance considerations for companies navigating the rapidly evolving prediction market landscape.
CFTC Division of Enforcement Issues New Cooperation Policy
The CFTC’s Division of Enforcement has issued a significant new policy on cooperation that reshapes how self-reporting, cooperation, and remediation will affect enforcement outcomes. The May 19, 2026 Staff Advisory replaces prior guidance and, for the first time, creates a defined framework for when the Division may decline to recommend an enforcement action altogether.
The policy establishes detailed criteria for declinations, including prompt voluntary self-reporting, full cooperation, timely remediation, and restitution or disgorgement, while also introducing structured penalty reduction tiers of up to 75% for parties that cooperate even if they do not qualify for a declination. At the same time, the guidance raises the stakes on timing, requiring parties to report misconduct “at the earliest possible opportunity.”
The new internal guidance provides important insight into how the Division intends to exercise prosecutorial discretion and will have significant implications for firms evaluating potential misconduct, internal investigations, and disclosure decisions. Read the full Sidley post for a detailed analysis of the policy’s requirements, cooperation credit framework, and practical considerations for market participants. The CFTC press release can be found here.
The First Prediction Market Insider Trading Case: SDNY and CFTC Test the Limits of Fraud and Commodities Law
On April 23, 2026, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) and the Commodity Futures Trading Commission (“CFTC”) announced parallel criminal and civil actions against a U.S. Army service member accused of using classified military information about a planned operation to capture Venezuelan President Nicolás Maduro to place profitable trades on Polymarket, a prediction market platform. The case, the first to apply traditional insider trading and fraud theories to prediction markets, signals a shift in how the government will regulate this emerging market. In response to this news, companies should consider reviewing company policies on insider trading and compliance to address prediction markets and the use of confidential information in connection with event-based trading.
Sidley Discusses CFTC Guidance, Advance Notice of Proposed Rulemaking for Prediction Markets
This article analyzes the CFTC’s latest guidance and proposed rulemaking efforts shaping the future of prediction markets, signaling a more assertive regulatory approach. It highlights key considerations for market participants, including contract design, manipulation risk, and engagement with regulators and industry stakeholders, particularly in the context of sports-related event contracts. (more…)
The CFTC’s Completion of “Enforcement Sprint” Offers Insight Into the New Administration’s Enforcement Approach
On September 4, 2025, the Commodity Futures Trading Commission (CFTC) issued six orders simultaneously filing and settling material compliance-related violations against 10 firms and imposing $8,325,000 in total penalties. These orders marked the completion of the “enforcement sprint” that Acting Chair Caroline Pham announced in March 2025, as well as the first application of the Division of Enforcement’s February 2025 Advisory on Self-Reporting, Cooperation, and Remediation (2025 Advisory).
Ian McGinley, Former Director of Enforcement for the CFTC, Joins Sidley’s Regulatory and Enforcement Practice
Sidley is pleased to announce that Ian McGinley has joined the firm as a Securities Enforcement and Regulatory partner in the Regulatory and Enforcement practice group in New York. Mr. McGinley was most recently the Director of Enforcement for the U.S. Commodity Futures Trading Commission (CFTC). At Sidley, he will focus on regulatory enforcement and white-collar criminal defense, with a particular emphasis on commodities and securities laws. He will also advise clients in civil and criminal matters involving digital assets.
