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ARTICLE · 13 DECEMBER 2018

Screaming Into A Pit: CFTC Gets Empty Response To Market Manipulation Claims

Ropes & Gray LLP
Ropes & Gray LLP
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In an opinion released on November 30, 2018, federal Circuit Judge Richard Sullivan dismissed a lawsuit brought by the U.S. Commodity Futures Trading Commission.

United StatesFinance and Banking
Christopher P. Conniff
Christopher P. Conniff
Helen Gugel
Helen Gugel
Deborah Monson
Deborah Monson
David Nasse
David Nasse
Stefan Schropp
Stefan Schropp
Katherine M. Sullivan
Katherine M. Sullivan
Daniel Ward
Daniel Ward
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In an opinion released on November 30, 2018, federal Circuit Judge Richard Sullivan dismissed a lawsuit brought by the U.S. Commodity Futures Trading Commission (the "CFTC") seeking to hold a prominent Chicago trader and his investment firm liable for manipulation and attempted market manipulation of a highly illiquid segment of the interest rate swaps market. The decision—which followed a four-day bench trial conducted in 2016—is noteworthy not only for the setback dealt to the CFTC in its first market manipulation trial since 2008, but also for the overarching tenor of the opinion. The CFTC had argued that defendants, responding to a perceived undervaluing of certain swaps, had engaged in market manipulation by placing bids designed to drive up the price of those swaps, thereby benefiting from gains to preexisting long positions and from daily margin payments. Judge Sullivan pulled no punches in concluding that efforts to drive prices towards their "true" value are

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