LeapRate Forex Fraud Watch – Donald R. Wilson and DRW Investments


DRW Investments filed a pre-emptive lawsuit against the US regulator

The CFTC filed a civil lawsuit against Donald R. Wilson and his company DRW Investments, LLC. Charges are for unlawful manipulation of a 3-month interest rate swap futures contract in a period of at least 8 months – between January and August 2011. According to the regulator, the firm has allegedly profited at least $20 mln. from the transactions in question, while counterparties have suffered losses to the same amount.

Back in September, Bloomberg reported that the firm has pre-emptively countersued the CFTC, stating that no such manipulation has occurred and claiming that during the period in question no regulations were in place to make any transactions unlawful. DRW’s actions were looked at as illegal by the CFTC. Because of the time period within which the relevant trading occurred, the CFTC has acknowledged that it is seeking to penalize DRW under the law as it existed prior to the implementation of the amendments to the CEA and directives to the CFTC resulting from the Dodd-Frank Act.

According to the CFTC the three month interest rate swap contract was listed by the International Derivatives Clearinghouse (IDHC) and traded on the NASDAQ OMX Futures exchange. DRW built-up a substantial long position in the contract and began placing bids in the “settlement section” in the OTC market prior to the close every day. In the absence of exchange traded bids the settlement prices were derived from the OTC market, hence providing an advantage to the long position of Mr. Wilson and his company.

Whether or not this was a fair practice during the time, will be determined in the lawsuits. The CFTC claims that multiple bids were in fact placed during the settlement window, but were never executed.

For the full press release by the CFTC visit their website here.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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LeapRate Forex Fraud Watch - Donald R. Wilson and DRW Investments

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