Lawyers
Litigation partner Antonia Apps spoke with Global Investigations Review about the first-ever enforcement action over insider trading in the prediction markets and what she expects to see going forward. Prediction markets are exchange-traded platforms where users buy and sell contracts to bet on the outcome of future events, such as elections, economic data or sports. In “SDNY, CFTC step into prediction markets enforcement with ‘fortuitous’ case,” published on May 6, Antonia said that this enforcement action, in which the U.S. Attorney’s Office in Manhattan and the Commodity Futures Trading Commission (CFTC) are pursuing a U.S. army soldier who made over $400,000 betting on military maneuvers he was involved in planning and executing, is likely the first of more to come.
“This is an interesting and growing area where technological innovation and regulatory change will intersect,” Antonia says, adding that the CFTC’s signaling that it wants to have exclusive jurisdiction over prediction markets and “be the cop on the beat” means that the regulator “wants to ensure that the market participants have the leeway to grow, that innovation will not be stifled, while policing misconduct, whether in the form of insider trading or other manipulative conduct.”
Antonia also notes that prediction markets could grow in a way that allows more frictionless trading of stocks, options, bonds and other financial products that are currently traded on more established markets, and that she expects the U.S. Securities and Exchange Commission will want jurisdiction over that type of trading activity.
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