Alan B. Miller, Trustee in Bankruptcy of American Ibc Corp., Bankrupt v. Wells Fargo Bank International Corp.

OAKES, Circuit Judge:

Arbitrage in foreign exchange — the simultaneous purchase and sale of foreign currency in order to profit from discrepancies between the sales price and the purchase price in separate markets — is a relatively sophisticated form of investment, and properly conducted may be entirely risk-free to the investor. Such a transaction may be equally risk-free, though even more exotic, when it includes the following steps:

(A) the arbitrager borrows dollars from a New York bank;

(B) these dollars are used to purchase Swiss Francs, which are deposited in the arbitrager’s time deposit…