CFTC files opposition to industry group amicus brief in CFTC action against DRW

On July 13, the CFTC filed an opposition to an amicus brief filed by a group of prominent industry associations (CME Group Inc.; Commodity Markets Council; Futures Industry Association, Inc.; Intercontinental Exchange, Inc.; and the Managed Funds Association) in the CFTC’s enforcement action against defendants Donald R. Wilson and DRW Investments, LLC for alleged manipulation and attempted manipulation of the price of certain futures contracts on interest rate swaps.  In their amicus brief, the industry groups argue that the CFTC is wrongly trying to change the settled legal standard for attempted price manipulation.  The argument is over whether, under the “traditional” standard for attempted manipulation (as opposed to the new, broader alternative manipulation provision added by the Dodd-Frank Act), the CFTC has to show only an intent to “affect” price (the CFTC’s position), or whether the CFTC has to show an intent “to create an artificial price” (the defendants’ position, supported by the amicus brief).  The CFTC argues that, to establish attempted manipulation, the CFTC must prove (1) an intent to affect market prices and (2) an overt act in furtherance of that intent.  According to the CFTC, the amicus brief directly contradicts the law of the case, ignores all undisputed facts about defendants’ specific intent to define and affect prices, and jettisons without reference all adverse case law.

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