Dan Shak is accused of manipulating the gold and silver futures markets

Dan Shak is accused of manipulating the gold and silver futures markets

The United States Commodity Futures Trading Commission (CFTC) has launched a civil enforcement action against a well-known high-rolling poker player for alleged spoofing activities in the gold and silver futures markets. The practice of bidding or offering with the intent to cancel the bid or offer before execution means to place fake purchase offers with the intention of manipulating the market price of the commodity in question.

According to a press release issued today by the CFTC, Shak placed deceptive and manipulative orders on hundreds of different occasions between February 2015 and March 2018). According to the allegations, Shak wanted to drive up the price of gold and silver by selling his own holdings in the precious metals.

He actually 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 did. He was able to fill orders on the opposite side of the market sooner, at a better price, and in larger quantities than they otherwise would have been filled, because of his spoof orders.

The action is civil, not criminal, which means that the action could result in significant financial levies and trading penalties against the person. The CFTC wants civil monetary penalties, disgorgement, trading bans, and permanent injunctions against future violations of the federal commodities laws, as charged. The case was filed in the District of Nevada in the U.S. District Court. Las Vegas is the home of Shak, who was originally from New York.

Civil action is the latest episode in a career that has made him famous

It is not the first time that Shak has been involved in controversial and headline-generating activities in his lengthy market-trading career, which in turn has afforded him the lifestyle choice of participating in high-stakes poker events for two decades.

He was accused of using a scheme called “banging the close” during a couple of trading days back in 2008. In that episode, his firm flooded the oil-futures market with end-of-day orders in an attempt to manipulate that market. While being banned from trading in oil and certain other commodity-related futures, as well as paying a $400,000 settlement, Shak and his company were sued by the CFTC and eventually agreed to pay a $400,000 settlement.

The largest mainstream headlines of his trading career were generated by his trading in gold. The hedge fund held gold futures worth up to $850 million, despite only holding $10 million in assets. When Shak chose to sell out of the gold market in reaction to competing market forces he thought were driven by JP Morgan, the gold market trembled.

The same sort of spoofing activities that Shak himself was sued for today are alleged in the suit that he and two other metals traders eventually filed against JP Morgan. JP Morgan quietly paid an undisclosed amount to Shak and the other two traders in 2020, as well as paying a massive settlement to the CFTC for widespread illegal trading operations, notwithstanding the firm’s official denial of the spoofing charges.

The poker player ranked in the top 100 in global tourney winnings

Being described as a part-time or semi-pro poker player, Shak epitomizes the “wealthy businessman who likes to play tournament poker” image. His major recorded tournament cashes date back to 2004, and he has over $11.7 million in live tournament winnings, ranking him 83rd on the Hendon Mob’s career global tournament-poker winnings list.

The 2010 Aussie Millions $100,000 Challenge, where he outdueled Phil Ivey to win the event’sAU $1.2 million (about US $1.1 million), is one of his major victories. That was the largest tourney score of Shak’s career.

There are two notable wins for Shak, though neither of them came in an official bracelet event. In 2007, the winners of the inaugural $5,000 “Ante Up for Africa” charity event were shared by two people, and one of them donated his portion of the winnings to charity. At the World Series of Poker Europe series in Czech Republic, Shak won the NLH Super High Roller tourney, beating 20 other players to win about $244,000. At the time, the event did not award a gold bracelet.

Summary:

The US Commodity Futures Trading Commission has filed a civil enforcement action against a poker player, accusing him of “spoofing” activities in the gold and silver futures markets. Between February 2015 and March 2018, there were hundreds of deceptive and manipulated orders placed by Shak. Civil monetary penalties, disgorgement, trading bans, and permanent injunction against future violations of the federal commodities laws are all sought by the CFTC.