Prediction Markets’ Internal Enforcement Programs Face Increased Scrutiny, Law360

Law360 quoted partners Stacie Hartman and Robert A. Schwartz in an article examining how the US Commodity Futures Trading Commission (CFTC) is signaling that prediction market platforms may serve as the first line of defense against insider trading and market manipulation.

Stacie noted that the CFTC has long taken exchange surveillance obligations seriously and suggested that prediction market platforms should expect the same level of scrutiny applied to traditional exchanges. She also observed that the retail nature of prediction markets presents unique enforcement challenges. “And to the extent this advisory reflects a bearing of teeth, from an enforcement perspective, it seems that it is directed at reflecting that it will apply that same scrutiny to prediction market DCMs as it has for all other DCMs,” she said.

Rob discussed how enforcement programs for prediction market platforms may differ from those of traditional exchanges and predicted that the agency will eventually pursue a high-profile case to reinforce its authority in the space. “They’ll pick somebody whose conduct is egregious, and it will be publicized,” Robert said.

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