Precious Metals Crime and Fraud - Commodity Futures Trading Commission (CFTC)

Commodity Futures Trading Commission (CFTC) ……
 

On Friday, August 5, 2022, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the District of Nevada against Daniel Shak of Las Vegas, Nevada, charging him with spoofing and engaging in a manipulative and deceptive scheme in the gold and silver futures markets.

In its continuing civil litigation, the CFTC seeks, among other relief, civil monetary penalties, disgorgement, trading bans, and a permanent injunction against future violations of the federal commodities laws, as charged.

“These charges demonstrate once again that the CFTC will vigorously prosecute to the fullest extent of the law, misconduct that has the potential to undermine the integrity of our markets,” said CFTC Acting Division of Enforcement Director Gretchen Lowe.

Case Background

The complaint 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. (CME Group Inc.). 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. 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.

The CFTC acknowledges and thanks CME Group Inc. for its assistance in this matter.

This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force. The Division of Enforcement staff responsible for this case are Brian Hunt, James Holl III, Maura Viehmeyer, Erica Bodin, Elizabeth May, Jordon Grimm, and Rick Glaser.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found at NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
 

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