The Commodity Futures Trading Commission on August 5 filed a civil enforcement action in the U.S. District Court for the District of Nevada against Shak, charging him with “spoofing and engaging in a manipulative and deceptive scheme in the gold and silver futures markets.”
In the litigation, the CFTC seeks civil monetary penalties, disgorgement, trading bans, and a permanent injunction against future violations of the federal commodities laws.
It’s not the first time Shak has been in trouble with the CFTC. In 2015, Shak was ordered to pay $100,000 for “attempting to manipulate the price of crude oil futures contracts on the New York Mercantile Exchange and violating speculative position limits on two days in 2008.”
In 2013, he was hit with a $400,000 fine for another violation.
The latest complaint against Shak alleges that from February 2015 through March 2018, Shak “repeatedly engaged in manipulative or deceptive acts and practices by spoofing—bidding or offering with the intent to cancel the bid or offer before execution—while placing orders for and trading gold and silver futures contracts on the Commodity Exchange, Inc.”
The government said that, “on hundreds of occasions,” 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.
“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 government said. “Shak’s spoof orders 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.”