# Pentagon memo prohibits trades based on nonpublic information

Canonical: https://chainminute.com/news/26070241-6145-4da4-9185-d88dfbe9162a
Published: 2026-10-23T00:49:36.657Z
Publisher: Chain Minute

The October 20 directive explicitly covers prediction markets, indirect transactions and unclassified information.

A Pentagon memorandum dated October 20 prohibits Department of War personnel from using nonpublic information in financial transactions, including prediction-market bets. The instruction was publicly reported on October 22.

The [signed memorandum](https://assets1.cbsnewsstatic.com/hub/cms/prod_cms_alt/file/2026/10/22/58a4e0e3-ea5f-49e2-b7fe-3bb3381c5987/hegseth_memo__1_.jpg.pdf) covers classified and unclassified information, transactions made directly and those made indirectly through a third party. It names Polymarket and Kalshi alongside traditional betting platforms, while applying its prohibition across all financial platforms. That wording addresses the information used, rather than announcing a blanket ban on every prediction-market transaction. It specifies no separate effective date, and it is an internal directive rather than new legislation.

The distinction between nonpublic and classified information matters. Separately, the executive-branch ethics standard in [5 CFR 2635.703](https://www.ecfr.gov/current/title-5/chapter-XVI/subchapter-B/part-2635/subpart-G/section-2635.703) defines nonpublic information by its connection to federal employment and whether an employee knows, or reasonably should know, that it has not been made available to the public.

That rule includes information protected from disclosure by law or regulation, information an agency designates confidential, and material that has neither been publicly disseminated nor authorized for release on request. Its prohibition also reaches improper use through advice, recommendations or knowing unauthorized disclosure to advance someone's private interests. The eCFR version checked was current through October 21; the personnel scope stated above comes from the Pentagon memorandum.

The instruction is separate from the [CFTC's October event-contract rulemaking](https://chainminute.com/news/74783c35-4245-4dab-82c3-62ffa0ffee1c). That action involved a proposal and an interim final rule addressing how event contracts and casino-style gambling fit the swap definition. Those proceedings concern contract regulation; the memorandum concerns personnel conduct.

## Sources

- [Do Not Compromise Military Operations for Personal Financial Gain: October20 memorandum](https://assets1.cbsnewsstatic.com/hub/cms/prod_cms_alt/file/2026/10/22/58a4e0e3-ea5f-49e2-b7fe-3bb3381c5987/hegseth_memo__1_.jpg.pdf) — U.S. Secretary of War / Pentagon memorandum, scanned copy hosted by CBS News
- [5 CFR 2635.703: Use of nonpublic information](https://www.ecfr.gov/current/title-5/chapter-XVI/subchapter-B/part-2635/subpart-G/section-2635.703) — Office of Government Ethics / eCFR
- [Pentagon bans US forces from using military info to bet in prediction markets](https://cointelegraph.com/news/pentagon-bans-us-forces-from-using-military-info-to-bet-in-prediction-markets) — Cointelegraph

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