In the case of spoofing, the Commodity Futures Trading Commission (CFTC) accused a metals trader from Nevada, who has a lucrative poker business, of spoofing the gold and silver futures markets.
The CFTC reported that Daniel Shak, who heads a small hedge fund SHK Management LLC, placed large orders of gold and silver futures that he intended to cancel before execution, and also placed orders on the opposite side of the gold or silver futures market. And so it has been hundreds of times.
Spoofing is a tactic of manipulating the gold and silver markets by submitting applications or offers and canceling them before execution. The CFTC claims that from February 2015 to March 2018, Shak repeatedly engaged in such activities.
The CFTC is seeking civil monetary penalties, trade bans and a permanent injunction against future violations of federal commodity laws.
This is not Shak's first encounter with the CFTC. He returned in March 2015 after being ordered not to trade for the last minute in the gold futures market.
Shak is also well known in the poker world. He has participated in 150 major poker tournaments and for almost 20 years, and won more than $11.7 million.
Ten years ago, the Wall Street Journal also reported that Shak made a big bet on gold, which failed and forced him to liquidate the position and return the money to customers. At the time of writing the report, Shak's hedge fund had contracts worth more than $850 million, which accounted for more than 10% of the main US futures market.
Spoofing has been in the main headlines over the past few weeks as markets digest the ongoing high-profile case involving several JPMorgan Chase traders.
After a three-week trial, the jury continues for the sixth day to discuss the most significant court case in history that affected the precious metals market.
Michael Novak, head of precious metals at JPMorgan Chase, Gregg Smith, a gold trader, and Jeffrey Ruffo, an executive director specializing in hedge fund sales, were accused of manipulating and falsifying gold and silver prices for eight years between 2008 and 2016.
