[Photo of Don Wilson of DRW Holdings; Photo by Kristan Lieb for The WSJournal]

The CFTC took DRW Investments - a Chicago-based trading firm - and its prominent founder, Don Wilson, to trial on Thursday over claims they manipulated the price of a futures contract, illegally earning nearly $13.5 million. The parent company, DRW Holdings, is privately-held and employs 725 people.

Attorneys for the CFTC say traders at DRW Investments placed bids that they did not intend to have consummated, affecting more than 1,000 three-month interest-rate swap futures contracts and creating prices that were inconsistent with what would have otherwise occurred in the market.

In court papers the CFTC claims that DRW bought more than $350 million of interest-rate futures, anticipating the position's value would increase. When the underlying rates for the contracts did not rise as high as the firm hoped, Wilson and DRW manipulated those rates by placing bids they knew would never be accepted to increase their positions' value. Over the course of 118 days, DRW placed bids during a 15-minute settlement window used by the NASDAQ OMX Futures Exchange to determine the contract's close-of-day value, resulting in the setting of artificial prices.

An attorney for DRW and Wilson countered the charges, saying his clients did not intend to manipulate prices and had instead submitted real bids based on legitimate economic rationales, particularly to entice buyers in an illiquid market.

The CFTC wants DRW to forfeit $13.5 million in profits and pay penalties. It has also asked the judge to impose a permanent registration and trading ban on Wilson and DRW.

U.S. District Judge Richard Sullivan in Manhattan will decide the case – i.e., there is no jury – a rarity in a CFTC market manipulation case, which more often ends in a settlement.