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.
Prediction Markets and Insider Trading: Why Organizations Should Update Compliance Policies Now
As prediction markets expand to cover corporate, regulatory, and geopolitical events, organizations face new compliance risks when employees, directors, or other insiders possess nonpublic information that could affect the value of event contracts.
In this post, we examine the first insider trading case involving prediction markets, discuss the government’s position that existing insider trading and antifraud principles apply to these markets, and outline practical steps organizations can take to strengthen their governance frameworks. We also explore why existing insider trading, confidentiality, and code of conduct policies may be insufficient and provide recommendations for updating policies, training, and compliance controls to address this emerging risk area.
Read our analysis of the evolving regulatory landscape and the measures organizations should consider to mitigate legal, reputational, and compliance risks associated with prediction market activity.
New U.S. SEC Enforcement Director David Woodcock Signals Continued “Back to Basics” Approach
New SEC Enforcement Director David Woodcock used his first public remarks to signal continuity with Chairman Paul Atkins’s “back to basics” agenda, emphasizing “quality over quantity” and a focus on cases involving real investor harm rather than technical violations. Woodcock identified key enforcement priorities and announced reinstitution of the Retail Fraud Working Group to focus specifically on protecting retail investors.
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.
Ninth Circuit Vacates Insider Trading Conviction Over Court’s Failure to Investigate Juror Bias
On April 21, 2026, a Ninth Circuit panel vacated an insider trading conviction in United States v. Bolandian, holding that the trial court failed to properly investigate a juror who admitted he was “not sure” he could remain impartial. The case involved a Los Angeles trader accused of profiting from confidential merger tips, resulting in a conviction and 24-month sentence. But on appeal, the court found plain error in allowing the uncertain juror—who ultimately served as foreperson—to remain without further inquiry. Emphasizing the court’s independent duty to ensure juror impartiality, the decision underscores that even without a defense objection, unresolved bias concerns can mandate a new trial—offering both a cautionary note and a safeguard for defense counsel.
