The US federal district court judge hearing the alleged manipulation case against Donald Wilson and DRW Investments LLC brought by the Commodity Futures Trading Commission in 2013 constantly interrupted closing arguments by CFTC attorneys to try to better understand why, if, as alleged, the defendants were constantly bidding prices that were artificially high, no sellers hit their bids to take advantage of the artificially high prices. In its initial complaint the CFTC had charged the defendants with manipulating and attempting to manipulate the settlement prices of the IDEX USD Three-Month Interest Rate Swap Futures Contract listed on the NASDAQ OMX Futures Exchange and cleared by the International Derivatives Clearing House at various times from January through August 2011. According to the Commission, DRW established a long position in the Three-Month Contract beginning in August 2010. Afterwards, beginning in December 2010, the defendants placed bids “that DRW knew would never be accepted” artificially to influence the settlement prices in their favor during the 15-minute period that most influenced settlement prices on at least 118 trading days, in a “banging the close”–type scheme, charged the CFTC. According to Commission attorneys during their closing arguments, it was the intent of defendants to produce a “price distortion” through placement of “illegitimate bids during the closing period day after day for seven straight months” that favored defendants’ existing positions (by prompting favorable settlement prices) that resulted in “a price distortion.” Among other things, said the Commission staff, defendants’ bids were illegitimate because they knew there was no market interest on the other side. However, during the Commission’s closing arguments, the Hon. Richard J. Sullivan, the judge hearing the case, repeatedly interrupted and questioned the CFTC’s attorneys to better understand why defendants’ bids were illegitimate and the settlement prices that derived from defendants’ bids were artificial. According to the court, “if you are bidding here and nobody is taking in an efficient and rational market, that’s because your bids are too low and you better raise them and somebody might bite the more you raise it. Isn’t the fair inference that these bids were not artificial or, if they were artificial, they are artificially low?” Moreover, said the judge, “[w]hat is the rule that the CFTC wants to adopt here? If you are not getting hits after … two months, you can’t make bids anymore or you can’t make them in the settlement period because they will affect your open positions and we’re going after you if that’s the case?” A different judge previously ruled in this case that the CFTC had to prove that defendants had “the specific intent to affect market prices that ‘did not reflect the legitimate forces of supply and demand’” in connection with its enforcement action against the defendants alleging manipulation and attempted manipulation. (Click here for details in the article, “Federal Court Holds That CFTC Must Show Artificial Price to Prevail in Traditional Manipulation Lawsuit,” in the October 2, 2016 edition of Bridging the Week.) Post-trial briefs by by CFTC and the Defendants are due in the current action by December 21; a decision will be rendered by the judge afterwards.