Donald R. Wilson, of Illinois, is facing charges of market manipulation brought by the U.S. Commodity Futures Trading Commission (CFTC), filed November 6, 2013, in the U.S. District Court for the Southern District of New York. Wilson, along with his company DRW Investments, LLC, is accused of unlawfully manipulating the price of the IDEX USD Three-Month Interest Rate Swap Futures Contract between January and August 2011.
The CFTC alleges that Wilson directed a scheme to artificially inflate the value of DRW’s substantial $350 million long position in the Three-Month Contract. The complaint details a practice known as “banging the close,” where DRW placed numerous bids during the final 15-minute “settlement window” of trading, only to cancel them before they could be executed. This tactic aimed to influence the contract’s settlement price, as the exchange’s methodology relied on these bids in the absence of active trading.
According to the CFTC, Wilson and DRW profited by at least $20 million through this manipulation, while their trading counterparts suffered equivalent losses. The scheme reportedly affected over 1,000 futures contracts over 118 trading days. The complaint asserts that Wilson violated Sections 6(c) and 9(a)(2) of the Commodity Exchange Act.
“Traders cannot engage in manipulative acts to affect the price of futures contracts to achieve their desired profits, regardless of the so-called motive,” stated Gretchen L. Lowe, the CFTC’s Acting Director of Enforcement. “Today’s action demonstrates that the Commission will vigorously prosecute such cases to protect the integrity of the markets.”
The CFTC is seeking penalties against Wilson and DRW Investments, LLC, including potential fines and trading restrictions, though specific amounts were not detailed in the release. The case is being pursued in an effort to restore market integrity and prevent future manipulative practices.
Source: CFTC.gov
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