CFTC charges World Series of Poker player Dan Shak with ‘spoofing’

Rick Steves

His spoof orders allegedly 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.

The Commodity Futures Trading Commission has charged Daniel Shak with spoofing and engaging in a manipulative and deceptive scheme in the gold and silver futures markets.

Daniel Shak is a hedge fund manager mostly known for his participation in the World Series of Poker. He established SHK Asset Management, a hedge fund focused on gold futures.

This is not the first time he has found himself in hot water with regulators in the United States. In 2013, he was ordered to pay a $400,000 fine for attempting to manipulate the price of Light Sweet Crude Oil (WTI) futures contracts on the New York Mercantile Exchange (NYMEX). As a result, he was permanently banned from trading in any Crude Oil markets.

He also settled a claim against him in March 2015 related to trading during the closing minute of gold and silver futures markets. In December 2020, following a Business Conduct Committee investigation, he was fined $65,000 fine for engaging in disruptive activity in the silver and gold futures markets.

Hundreds of ‘trick’ orders for gold and silver futures

The new civil enforcement action in the U.S. District Court for the District of Nevada states that, from February 2015 through March 2018, Daniel Shak repeatedly engaged in manipulative or deceptive acts and practices by spoofing 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. By placing the spoof orders, Shak intentionally or recklessly sent false signals of increased supply or demand that were designed to trick market participants into executing against orders on the opposite side of the market, which he actually wanted filled, the CFTC said.

The regulator added that, on hundreds of occasions, Daniel 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.

His spoof orders allegedly 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.

CFTC Acting Division of Enforcement Director Gretchen Lowe, said: “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.”

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