Dan Shak has found himself in trouble yet again, the high stakes poker amateur charged with “spoofing” the Gold market, a highly-unethical practice that has seen traders jailed in the past…
ENFORCEMENT NEWS: CFTC Charges Nevada Metals Trader with Spoofing in Gold and Silver Markets. https://t.co/cTJekzTwVz
— CFTC (@CFTC) August 5, 2022
Shak has fallen foul of the US Commodity Futures Trading Commission, who claim that between February 2015 and March 2018, the 63-year-old “repeatedly engaged in manipulative or deceptive acts and practices… while placing orders for and trading gold and silver futures contracts on the Commodity Exchange, Inc.”
“Spoofing” is bidding or offering with the intent to cancel the bid or offer before execution, allowing the spoofer to make money when the market reacts to the activity.
The CFTC, charging Shak under the Dodd-Frank Act of 2010, Section 747, allege that “On hundreds of occasions, Shak entered large orders for gold or silver futures that he intended to cancel before execution, while placing orders on the opposite side of the gold or silver futures market.
This tricking of the supply and demand signals “allowed him to fill orders on the opposite side of the market sooner, at a better price, and/or in larger quantities than they otherwise would have been filled.”
Vegas resident Shak, who has more than $11.7million in poker cashes to his name, has previous for similar behaviour.
In 2013 he was fined $400,000 for a similar manipulation of crude oil prices, receiving a permanent ban from that market by the New York Mercantile Exchange (NYMEX).
Two years later, Shak was at it again, ignoring orders not to trade during the closing minute of the gold futures market, and was later fined $65,000 for his actions.
The CFTC is currently seeking “civil monetary penalties, disgorgement, trading bans, and a permanent injunction against future violations of the federal commodities laws”.
“These charges demonstrate once again that the CFTC will vigorously prosecute to the fullest extent of the law, misconduct that has the potential to undermine the integrity of our markets,” said CFTC Acting Division of Enforcement Director Gretchen Lowe.
Shak, who cashed multiple times at the recently-concluded 2022 World Series of Pokerr, has yet to comment on the charges.
Although a civil matter at the moment, traders have previously been jailed for “spoofing.”
In November 2015, New Jersey trader Michael Coscia became the first person to be convicted of “spoofing”, when a jury found him guilty of employing an illegal and fraudulent strategy to trade futures contracts.
Coscia was sentenced to three years’ imprisonment on six charges of spoofing as well as six charges of commodities fraud.
Shak’s case may not be quite so serious, but it comes as another Chicago jury is deliberating a high-profile case involving three former JP Morgan bankers accused of “spoofing” and other charges. JP Morgan paid out $920million just two years ago to settle their share of the blame.
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