Published on: August 7, 2022, 12:40 p.m.
Last update: August 8, 2022, 11:30 a.m.
High-stakes poker player Dan Shak is in hot water with US financial regulators – again. On Friday, the 63-year-old circuit regular was accused of spoofing the gold and silver markets on the Commodity Exchange Inc. (COMEX).
“Spoofing” refers to the illegal practice of placing bids on commodities with the intention of canceling before execution in an attempt to manipulate the market.
According to the civil complaint filed by the Commodity Futures Trading Commission (CFTC), from February 2015 to March 2018, and on “hundreds” of times, Shak engaged in “manipulative or deceptive acts”. He did this by placing large gold or silver futures orders that he had no intention of closing. At the same time, he entered real orders on the other side of these markets.
“By placing the false orders, Shak intentionally or recklessly sent false signals of increased supply or demand that were designed to induce market participants to execute orders on the opposite side of the market, which he wanted actually execute,” the CFTC complaint alleges.
Shak’s false orders allowed him to fill the orders on the other side of the market sooner, at a better price and/or in larger quantities than they would otherwise have been filled,” explained the CFTC.
The watchdog seeks, among other remedies, civil monetary penalties, restitution, trade bans and a permanent injunction against future violations of federal commodity laws, as charged.
Las Vegas resident Shak is well known in the poker world and is part of the high stakes tournament circuit. He has around $11.7 million in net tournament winnings, according to the Hendon Mob database. He is also the founder and former director of the hedge fund SHK Management. His LinkedIn page currently lists him as an “independent commodity trader.”
Shak has had issues with the CFTC before. In 2013, he was fined $400,000 for attempting to manipulate the price of light sweet crude oil futures on the New York Mercantile Exchange (NYMEX). He was banned from trading outright futures on any market during the shutdown period for two years. In 2015, he was fined $100,000 for violating this ban.
These charges further demonstrate that the CFTC will vigorously pursue, to the fullest extent permitted by law, any wrongdoing that could undermine the integrity of our markets,” Gretchen Lowe, the CFTC’s acting division chief enforcement officer, said of the latest charges.
The charges follow a high-profile racketeering case involving three former JP Morgan bankers. They are charged with conspiracy to commit price manipulation, wire fraud, commodity fraud and impersonation in the precious metals futures markets. A jury in Chicago is currently deliberating on the case.
In 2020, JPMorgan paid $920 million to resolve regulatory charges relating to the defendants’ alleged conduct.