Dan Shak, a semi-professional poker player and hedge fund manager, has reached a settlement with the Commodity Futures Trading Commission (CFTC) two years after he was charged with spoofing. While Shak was confident that he could have prevailed at trial, he decided that resolving the matter quickly was more important.
According to CFTC’s allegations, Shak tried to manipulate and spoof the gold and silver markets. Spoofing refers to the practice of placing market orders and canceling them just before fulfillment. This allows practitioners to illegally manipulate markets.
The CFTC claims that between February 2015 and March 2018, Shak placed hundreds of orders on gold and silver futures with the intent to cancel them. He’d usually place a small order that he intended to execute, followed by a larger resting order on the opposite side of the market that he would cancel after the fulfillment of the initial order.
According to the accusations, Shak “knew or was reckless to the fact that his Spoof Orders would send false signals of supply and demand into the market and would deceive or trick other market participants.”
Shak Believes He Could Have Prevailed
On April 9, Shak reached an agreement with the CFTC and accepted a variety of penalties, including ones that prevent him from having any commodity interests traded on his behalf and soliciting, receiving, or accepting any funds from anyone for the purpose of selling commodities. He would also need to pay a settlement of $750,000.
Shak has managed to reach this settlement without admitting guilt. In a statement provided to PokerNews via a PR firm, he explained that he is confident that he could have prevailed at trial but decided to spare himself the costs and delays associated with protracted litigation.
As part of finalizing the settlement, the CFTC required that I not deny their allegations, but I also do not admit them. I was an active trader making millions of trades per year, and the CFTC’s allegations relate to a small fraction of trades that allegedly occurred from 2015 to 2018.
Dan Shak
Shak added that he has been a member in good standing on the exchanges for 45 years. After retiring two years ago, he decided that now would be a good time to put this matter behind him, pursue other opportunities and avoid unnecessary litigation costs.