SEC eyes enforcement action over prediction market insider trading

The U.S. Securities and Exchange Commission (SEC) has warned that prediction markets offering contracts linked to corporate earnings and business performance could face enforcement action over insider trading, fraud and market manipulation. Summary The SEC is monitoring prediction markets for insider trading, fraud and market manipulation. Enforcement Director David Woodcock said contracts linked to company earnings and performance figures may fall under SEC oversight. The regulator recently approved Cboe options tied to corporate performance measures, including earnings and sales figures. The CFTC continues to oversee federally registered prediction exchanges while fighting states over gambling laws. Regulators have requested public input on how to classify derivatives that may fall under both agencies’ authority. SEC Enforcement Director David Woodcock said the agency was monitoring activity on prediction platforms and expected to pursue potential securities violations, according to an October 29 Bloomberg report. “We’re following that very closely,” Woodcock said. “We have to be ready to act when people are committing fraud or committing other securities violations, and I think ...