ROCKVILLE, MD, UNITED STATES, October 29, 2026 /EINPresswire.com/ — StarCompliance, a global provider of employee and firm compliance technology solutions, has released a new article, “Four Insider Trading Theories Every Compliance Team Should Understand for Digital Markets,” explaining how established insider trading law applies to digital assets, tokenized securities, and prediction markets.
Compliance professionals often ask whether these new asset classes will force regulators to rewrite insider trading rules. According to StarCompliance, they will not. Regulators are applying decades of legal precedent to new instruments, trading venues, and technologies. The core questions stay consistent whether a firm’s exposure comes through public equities, cryptocurrencies, tokenized securities, or prediction market contracts:
– Was material nonpublic information (MNPI) involved?
– Did someone owe a duty of trust or confidence?
– Did someone use the information for personal financial gain?
Four Theories, Applied to New Markets
StarCompliance walks through four areas compliance teams should understand as markets evolve:
– Classical theory is the foundation of every modern insider trading case. It bars directors, executives, employees, and others with a fiduciary duty to shareholders from trading while they hold MNPI. StarCompliance notes that representing a security as a token does not change that obligation, and recommends writing employee trading policies broadly enough to cover new instruments.
– Misappropriation theory extends liability to people outside the company who gain confidential information through a relationship of trust. Examples include investment bankers, consultants, lawyers, and technology vendors. This theory becomes more relevant as prediction markets let individuals trade contracts tied to regulatory decisions, mergers, and other events.
– Shadow trading gained attention through SEC v. Panuwat. Under this theory, liability may reach an economically related asset rather than only the security directly tied to the confidential information. StarCompliance explains why this matters in digital markets, where Layer 1 and Layer 2 protocols and tokenized real-world assets often react to the same events.
– Conduct risk comes up in prediction markets. Compliance teams now have to consider whether someone could influence the outcome of an event they are trading on. They also have to consider whether someone could profit from confidential business information outside traditional securities markets. Exchanges are strengthening surveillance and market integrity controls as regulatory scrutiny increases.
Why Restricted Lists Are No Longer Enough
Traditional restricted lists monitor individual securities. They were not designed for markets this interconnected, or for markets where people can gain economic exposure without buying the underlying security. StarCompliance recommends extending employee trading policies past brokerage accounts. Policies should also cover digital asset exchanges, prediction market platforms, and any other venue where MNPI could be turned into profit. That requires understanding how information moves across markets and how assets connect.
Connected Compliance for Interconnected Markets
StarCompliance presents its Connected Compliance approach as a response to these risks. The approach brings employee trading, digital assets, prediction markets, surveillance, and analytics onto one platform. This helps firms spot new risks sooner and act on them with more confidence.
For compliance leaders updating employee trading policies for new markets, the full article is now available on the StarCompliance blog. It also includes real-world prediction market scenarios to help compliance teams prepare.
About StarCompliance
StarCompliance is the leading intelligence and automation platform for employee and firm compliance technology solutions. Trusted for over 25 years by leading firms in the financial services community and with users in 120 countries, the StarCompliance Enterprise Platform provides a user-friendly interface that connects people, workflows, and data, delivering AI-enabled technology and actionable insights needed to proactively mitigate risk and monitor conflicts globally. Visit www.starcompliance.com to discover the comprehensive security, explainable intelligence, and unparalleled assurance you need to build a connected culture of compliance today.
Greg Tarmin
StarCompliance
Greg.Tarmin@starcompliance.com
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