Tags: manipulation | illiquid | high-frequency | CFTC

Speed-Trader Sues US Regulator Ahead of Possible Manipulation Case

Tuesday, 17 Sep 2013 03:05 PM

A Chicago speed-trading firm sued the U.S. swaps regulator on Tuesday, saying it acted to prevent the agency from bringing an unfounded case against it for manipulating futures contracts.

DRW Investments, named after founder Donald R. Wilson, a prominent Chicago trader, said it filed a complaint to prevent the Commodity Futures Trading Commission from bringing an enforcement action.

The CFTC has not yet brought a case. The CFTC had no immediate comment.

A lawsuit was filed on Tuesday by DRW Investments in U.S. District Court for the Northern District of Illinois.

It has been the subject of a CFTC inquiry for nearly two years, and was first informed of the probe in a letter from the CFTC requesting documents on Aug. 26, 2011, Craig Silberberg, a DRW employee, said in a declaration filed in support of the case.

"This action arises from CFTC's stated intention to bring an enforcement action imminently, asserting that DRW violated ... the Commodity Exchange Act," DRW Investments and Wilson said in the lawsuit.

DRW said the CFTC was bringing a case in connection with DRW's trading in the IDEX USD3 Month interest rate swap futures contract, an illiquid financial instrument.

In April 2014, the CFTC's Division of Enforcement informed DRW through a phone call and a so-called Wells Notice that it intended to recommend to the Commission to file an enforcement action.

"DRW therefore understands that the filing of an enforcement action by the CFTC is imminent, unless the Enforcement Division's recommendation is rejected by the Commission," Silberberg said in a statement. Silberberg was identified as working in its trading unit.

Calling itself a "principal trading firm," DRW invests its own money in markets similar to a hedge fund, but without taking on outside clients.

Wilson is a board member of the Futures Industry Association, and the head of the FIA's Principal Trading Group, which represents high-frequency traders.

© 2017 Thomson/Reuters. All rights reserved.

 
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A Chicago speed-trading firm sued the U.S. swaps regulator on Tuesday, saying it acted to prevent the agency from bringing an unfounded case against it for manipulating futures contracts.
manipulation,illiquid,high-frequency,CFTC
313
2013-05-17
Tuesday, 17 Sep 2013 03:05 PM
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