1 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

JAMES H. HOLL, III, CA BAR NO. 177885 

BRIAN HUNT, NY BAR NO. 5260534 

COMMODITY FUTURES TRADING COMMISSION 

1155 21st Street, NW 

Washington, DC 20581 

Telephone (202) 418-5311 (Holl) 

Telephone (202) 418-5095 (Hunt) 

jholl@cftc.gov

bhunt@cftc.gov 

 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEVADA 

SOUTHERN DIVISION 

COMMODITY FUTURES 

 TRADING COMMISSION, 

 Plaintiff, 

 vs. 

DANIEL SHAK, an individual, 

 Defendant. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Case No. 

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL 

MONETARY PENALTIES, AND OTHER EQUITABLE RELIEF 

Plaintiff Commodity Futures Trading Commission (the “CFTC” or “Commission”) 

alleges as follows: 

I. SUMMARY 

1. From at least February 26, 2015 through March 1, 2018 (the “Relevant Period”), 

Defendant Daniel Lawrence Shak (“Shak”) engaged in a manipulative and deceptive scheme 

while placing orders for and trading gold and silver futures contracts on the Commodity 

Exchange, Inc. In furtherance of his scheme, 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). On hundreds of occasions during the Relevant Period, Shak entered large 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 1 of 54
2 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

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. In 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. 

2. By virtue of this conduct, as further described herein, Shak has engaged in acts and 

practices that violate 7 U.S.C. §§ 6c(a)(5)(C), 9(1), and 17 C.F.R. § 180.1(a)(1), (3) (2021). 

3. The Commission brings this action pursuant to 7 U.S.C. § 13a-1, to enjoin Shak’s 

unlawful acts and practices and to compel Shak’s compliance with the Commodity Exchange Act 

(the “Act”), 7 U.S.C. § 1-26 and Commission Regulations (the “Regulations”), 17 C.F.R. § 1-190 

(2021). In addition, the Commission seeks civil monetary penalties and other equitable relief, 

including but not limited to disgorgement, and trading and registration prohibitions, as the Court 

deems necessary and appropriate. 

II. JURISDICTION AND VENUE 

4. This Court has jurisdiction over this action under 28 U.S.C. § 1331 (federal 

question jurisdiction) and under 28 U.S.C. § 1345, which provides that district courts have 

original jurisdiction over civil actions commenced by the United States or by any agency 

expressly authorized to sue by Act of Congress. 7 U.S.C. § 13a-1(a) authorizes the Commission 

to seek injunctive relief in any proper district court of the United States against any person 

whenever it shall appear to the Commission that such person has engaged, is engaging, or is about 

to engage in any act or practice constituting a violation of any provision of the Act or any rule, 

regulation, or order thereunder. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 2 of 54
3 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

5. Venue properly lies with this Court pursuant to 7 U.S.C. § 13a-1(e), because Shak 

maintains a residence in the District of Nevada and thus can be found here, and because Shak 

transacted business in this district by trading commodity futures from his residence in this 

District. 

III. PARTIES 

6. Plaintiff Commodity Futures Trading Commission is the independent federal 

regulatory agency charged by Congress with the administration and enforcement of the Act and 

the rules, Regulations, and orders promulgated thereunder. One of its core responsibilities is to 

protect the public interest by deterring and preventing disruptions to market integrity. See

7 U.S.C. § 5(b). The Commission is headquartered at Three Lafayette Centre, 1155 21st Street 

NW, Washington, DC 20581. 

7. Defendant Daniel Lawrence Shak is an individual who maintains a residence in 

Las Vegas, Nevada. From at least April 1993 to August 2016, Shak was registered with the 

Commission as a floor broker. Shak was registered with the Commission as a floor trader from 

August 2016 to December 2018. 

IV. OTHER RELEVANT ENTITIES 

8. The Commodity Exchange, Inc. (“COMEX”) is a commodity exchange that is 

registered with the Commission as a designated contract market under 7 U.S.C. § 7, and defined 

as a “registered entity” under 7 U.S.C. § 1a(40). Among other commodities, COMEX lists silver 

and gold futures for trading. COMEX’s headquarters is located in New York, New York. 

9. CME Group Inc. (“CME”) is a Delaware corporation with its principal place of 

business in Chicago, Illinois. CME is the holding company that owns COMEX and operates 

(including during the Relevant Period) an electronic trading platform known as Globex located in 

Aurora, Illinois. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 3 of 54
4 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

V. LEGAL BACKGROUND 

A. Spoofing 

10. 7 U.S.C. § 6c(a)(5)(C) provides that “[i]t shall be unlawful for any person to 

engage in any trading, practice, or conduct on or subject to the rules of a registered entity that . . . 

is, is of the character of, or is commonly known to the trade as, ‘spoofing’ (bidding or offering 

with the intent to cancel the bid or offer before execution).” 

B. Manipulative or Deceptive Devices 

11. 7 U.S.C. § 9(1) provides that “[i]t shall be unlawful for any person, directly or 

indirectly, to use or employ, or attempt to use or employ, in connection with any swap, or a 

contract of sale of any commodity in interstate commerce, or for future delivery on or subject to 

the rules of any registered entity, any manipulative or deceptive device or contrivance, in 

contravention of such rules and regulations as the Commission shall promulgate.” 

12. 17 C.F.R. § 180.1(a) (2021) provides that “[i]t shall be unlawful for any person, 

directly or indirectly, in connection with any swap, or contract of sale of any commodity in 

interstate commerce, or contract for future delivery on or subject to the rules of any registered 

entity, to intentionally or recklessly: (1) [u]se or employ, or attempt to use or employ, any 

manipulative device, scheme, or artifice to defraud; . . . [or] (3) [e]ngage, or attempt to engage, in 

any act, practice, or course of business, which operates or would operate as a fraud or deceit upon 

any person.” 

VI. MARKET AND PRODUCT BACKGROUND 

A. Fundamentals of Gold and Silver Futures Markets 

13. A futures contract is an agreement to buy or sell a commodity for delivery or cash 

settlement in the future at a specified price. Like all commodity futures markets, the markets for 

gold and silver futures enable producers or consumers of gold or silver to hedge the price of those 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 4 of 54
5 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

commodities. For market participants generally, the gold and silver futures markets serve as a 

means for investment in gold and silver, which is commonly used to assume or shift price risk or 

to speculate on price. 

14. A futures contract traded on an exchange has standard, non-negotiable contract 

specifications, such as the quality, quantity, and physical delivery time and location for the given 

product. 

15. The gold futures contract (“Gold contract”) is traded on COMEX. The standard 

contract unit for the Gold contract (one “lot,” in trading terminology) equals 100 troy ounces of 

gold. The contract price is quoted in dollars per ounce, with a minimum price change (commonly 

referred to as a “tick”) of $0.10 per ounce. Because one Gold contract equals 100 ounces, a onetick change in the quoted price results in a $10 change in the actual price of a single lot ($0.10 per 

ounce x 100 ounces). 

16. The silver futures contract (“Silver contract”) is traded on COMEX. The standard 

contract unit for the Silver contract equals 5,000 troy ounces of silver. The contract price is 

quoted in dollars per ounce, with a minimum price change of $0.005 per ounce for outright 

contracts. Because one Silver contract equals 5,000 ounces, a one-tick change in the quoted price 

for an outright contract results in a $25 change in the actual price of a single lot ($0.005 per ounce 

x 5,000 ounces). 

17. Gold contracts are traded for delivery on a monthly basis for the current calendar 

month; the next two calendar months; any February, April, August, or October for the nearest 23 

months; and any June or December for the nearest 72 months. Silver contracts are traded for 

delivery on a monthly basis for the current calendar month; the next two calendar months; any 

January, March, May, and September for the nearest 23 months; and any July or December for the 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 5 of 54
6 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

nearest 60 months. Traders and other market participants typically refer to a futures contract 

according to the delivery month, so the Gold contract with a delivery month of February 2017 

would be referred to as the February 2017 Gold contract. 

18. The Gold and Silver contracts can be traded on CME’s Globex electronic trading 

platform between 5:00 p.m. Central Time on Sunday evening and 4:00 p.m. Central Time on 

Friday afternoon, with a 60-minute break each day beginning at 4:00 p.m. Central Time.1

B. Operation of CME’s Electronic Trading Platform (Globex) 

19. CME’s electronic trading platform, Globex, is an open-access marketplace that 

allows traders to view the book of visible orders and prices for futures contracts, and enter their 

own orders to buy or sell futures contracts. An “order,” in the context of electronic exchange 

trading, is a request submitted to the exchange to buy (that is, “bid”) or sell (that is, “offer” or 

“ask”) a certain number of a specified futures contract. An order may be for one or more lots. 

Orders are entered into the exchange’s order book, and when there is a willing buyer and seller for 

a contract at a specified price, a transaction occurs and the orders are “filled” or “executed” or 

“hit.”2 At any time before an order is fully filled, a trader may “cancel” the order. When an order 

is canceled, the contracts that have not yet been bought or sold are pulled from the order book. 

 

1

 All times described in this Complaint are expressed in Central Time, unless otherwise stated. 

2

 CME employs a matching algorithm to match bids and offers for execution on Globex. In 

certain markets, like the gold and silver futures markets at issue here, the matching algorithm 

applies a First-In-First-Out (“FIFO”) priority-in-time method to orders entered at the same 

price level of the order book. The first orders placed at a price level are the first to be 

executed. As a general matter, if there are multiple orders at a price level, the orders will be 

filled in the order they were placed. The orders that are first in line to be filled at a given 

price level are said to be at the “front of the queue,” and the last orders at a given price level 

are said to be at the “back of the queue.” As a general matter, the orders at the back of the 

queue will be filled only if all of the other orders at the same price level have already been 

filled. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 6 of 54
7 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

20. When a bid or offer is submitted through Globex, it becomes part of the list of 

orders reflected in the “order book” for a particular futures contract. Traders often consider 

information in the order book when making trading decisions. Traders are able to see the 

“visible” portion of the order book (also known as “market depth”) for at least ten price levels on 

the buy side and for at least ten price levels on the sell side for all market participants. Only the 

total numbers of orders and contracts at various price levels are visible, not the identities of the 

traders who placed the orders. 

21. For example, if the “best bid” (the highest price at which any trader is willing to 

buy) for a Gold contract is 12500, and the “best ask” (the lowest price at which any trader is 

willing to sell) is 12501, then on the buy side, the visible order book displays the lots available at 

price levels of 12500, 12499, 12498, 12497, and so forth until reaching the tenth-highest price 

level at 12491.3 On the sell side, the book displays the lots available at price levels of 12501, 

12502, 12503, 12504, and so forth until reaching the tenth-lowest price level at 12510. The “bidask spread” is the difference between the best ask and best bid price levels; accordingly, the bidask spread in the example above is 1 (12501 less 12500). 

 

3

 Globex displays the price for futures contracts without decimal points. In this example, the 

best bid is equal to a contract price of $1250.00 per ounce of gold, and the best ask is equal to 

a contract price of $1250.10 per ounce of gold. Globex displays the price of silver in a 

similar fashion. For example, a price of $19.005 per ounce of silver would be displayed in 

Globex as 19005. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 7 of 54
8 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

22. To illustrate, the chart below shows an example of how the first five levels of the 

visible order book in a Gold contract at a hypothetical moment in time could be visualized: 

Price Buy 

Orders 

Buy 

Lots 

Sell 

Orders 

Sell 

Lots 

12505 17 18

12504 21 22

12503 21 23

12502 12 12

12501 6 11 

12500 4 4 

12499 13 13

12498 17 23

12497 26 36

12496 17 25

23. An “aggressive” order is an order that crosses, or aggresses, the bid-ask spread in 

order to execute a trade. An aggressive buy order is a bid placed at the best ask price or higher, 

i.e., an order to buy at a price at which at least one other trader is currently willing to sell. An 

aggressive sell order is an offer placed at the best bid price or lower, i.e., an order to sell at a price 

at which at least one other trader is currently willing to buy. Using the example above, an 

aggressive buy order would be placed at 12501 (or higher if the best ask moved up) and an 

aggressive sell order would be placed at 12500 (or lower if the best bid moved down). 

24. A “passive” or “resting” order, by contrast, does not cross the bid-ask spread. A 

resting buy order is a bid placed at the best bid price or lower, i.e., an order to buy at a price that 

is lower than the price that other traders are currently willing to sell. A resting sell order is placed 

at the best ask price or higher, i.e., an order to sell at a price that is higher than the price that other 

traders are currently willing to buy. Using the example above, a resting buy order would be 

placed at 12500 or lower and a resting sell order would be placed at 12501 or higher. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 8 of 54
9 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25. An iceberg order is an order in which the size of the order is not fully visible to 

other market participants. For example, a trader may place an iceberg order for 100 Gold or 

Silver contracts, with only one contract visible on the order book to other market participants. 

C. How Futures Markets Respond to Order Activity 

26. All else being equal, in futures markets—including the gold and silver futures 

markets—prices will generally rise when there is more interest in buying a particular contract 

(i.e., the demand side) than there is in selling (i.e., the supply side); conversely, prices will 

generally fall when supply exceeds demand (i.e., there is more interest in selling than buying). 

27. Many market participants incorporate these general supply and demand concepts 

into their trading decisions. Market participants consider, for example, liquidity and market 

depth—i.e., the volume of lots and orders at various prices of the visible order book—to 

determine whether there is generally more interest to buy or to sell in the market at any given 

time, and thus whether a corresponding price change is likely. Market participants also consider 

“order book balance” or “order book pressure”—i.e., the ratio of lots and orders on the bid side of 

the market to the lots and orders on the offer side of the market. Many market participants use 

automated trading systems that analyze the market for imbalances in the order book or changes in 

the order book balance, and use that information to inform trading decisions. 

28. For instance, if there are substantially more lots and/or orders on the bid side than 

on the offer side, or if there is a large influx of orders on the bid side of the market, market 

participants may reasonably believe that there is more interest or increased interest to buy than to 

sell, and thus infer that a price increase is likely. These market participants may then trade 

accordingly, and some may attempt to buy lots before the expected price increase. In such a case, 

these market participants would place aggressive buy orders (i.e., at a higher price than the 

currently resting buy orders in the market), making execution of resting sell orders more likely. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 9 of 54
10 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

29. Spoofing and related manipulative or deceptive trading strategies seek to take 

advantage of these market fundamentals and market participants’ reactions to them. This might 

be done, for example, by placing one or more resting orders (which the trader intends to execute) 

on the sell side of the market, and then placing one large order or a series of relatively large orders 

(which the trader intends to cancel before execution) on the buy side. The large orders on the buy 

side might create an order book imbalance and convey a false appearance that there is more 

interest to buy than to sell in the market. This might deceive other market participants into 

trading at a time, price, or quantity they otherwise would not have, in a way that benefits the 

trader. In this example, the trader’s large buy orders could deceive other market participants into 

placing aggressive orders to buy, thus moving the price higher and allowing the trader’s sell 

orders to be executed sooner, at a better price, and/or in larger quantities than they otherwise 

would have been executed. Once the trader executes his desired sell orders, he would cancel the 

larger orders on the other side of the market. 

VII. SHAK’S MANIPULATIVE AND DECEPTIVE SCHEME 

30. During the Relevant Period, Shak held accounts at a futures commission merchant 

whose headquarters is in New York, New York (the “Futures Trading Accounts”). Shak entered 

orders and executed trades in the Futures Trading Accounts on his own behalf. Shak was directly 

or indirectly responsible for all of the orders placed in the Futures Trading Accounts. Upon 

information and belief, Shak directly placed the overwhelming majority of orders in the Futures 

Trading Accounts. To the extent that any other individual placed an order through the Futures 

Trading Accounts during the Relevant Period, they did so pursuant to authority granted to them 

by Shak. During the Relevant Period, all trading through the Futures Trading Accounts was done 

manually, by submitting orders, cancelations, and modifications using a computer mouse or 

keyboard. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 10 of 54
11 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

31. During the Relevant Period, Shak engaged in a manipulative and deceptive scheme 

(the “Scheme”) that consisted of spoofing the gold and silver futures markets on CME’s Globex 

electronic trading platform. Shak’s Scheme followed a general pattern: (i) placing a small order 

(between one and twenty-five lots) for Gold or Silver futures that he intended to execute 

(“Genuine Orders”); (ii) before or after entering a Genuine Order, placing one or more larger 

resting orders on the opposite side of the market, which he placed with the intent to cancel 

(“Spoof Orders”); and (iii) canceling his Spoof Orders, typically after his Genuine Order was 

filled. Shak engaged in more than 700 distinct Spoof Events—more than 400 Spoof Events in 

Gold futures, and more than 300 distinct Spoof Events in Silver futures.4 These 700-plus Spoof 

Events encompassed 1,808 individual Spoof Orders. 

32. When he engaged in the Scheme, Shak knew or was reckless to the fact that his 

Spoof Orders would send false signals of increased supply or demand (i.e., increased selling or 

buying interest) into the market and would deceive or trick other market participants. 

A. Shak’s Spoof Orders Deceived Other Market Participants 

33. Shak’s Genuine Orders and Spoof Orders were active simultaneously on opposite 

sides of the market, but, as noted above, the Spoof Orders encompassed a far greater total volume 

than the Genuine Orders. On several occasions, Shak placed his Genuine Orders as iceberg 

orders. In those instances, market participants saw only one or two visible lots of Shak’s iceberg 

Genuine Orders, and saw much larger Spoof Orders by Shak on the other side of the market. 

 

4

 The Commission identified Spoof Events by analyzing Shak’s trading activity to find all 

instances in which Shak created a large imbalance in a single trading account, with a large 

imbalance defined as an instance in which the visible working lots on one side of the market 

were at least 19 lots more and four times greater than the visible working lots on the other 

side of the market. For both sides, the imbalance was calculated within the top five levels of 

the market. In order for a trading pattern to be defined as a Spoof Event, Shak had to have 

placed or modified orders on both sides of the market. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 11 of 54
12 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Consequently, Shak’s use of iceberg Genuine Orders made the imbalance created by his Spoof 

Orders seem even greater than it was. In total, the median ratio of visible Spoof Order lots to 

visible Genuine Order lots during Spoof Events was approximately 50-to-1. 

34. Shak’s Scheme was designed to benefit financially from market participants’ 

reaction to his Spoof Orders. By entering orders that he intended to cancel, Shak deceived other 

traders about supply and demand, misleading market participants about the likely direction of the 

commodity’s price. Shak intended his spoofing activity to put pressure on the price in the 

direction of his Genuine Orders, and did so with the knowledge that the price pressure would trick 

other market participants into filling his Genuine Orders at his desired price. 

35. The following is a simplified explanation of how his Scheme was intended to work 

and often did work, using a hypothetical example of Spoof Orders on the buy side. Shak placed 

Spoof Orders to buy that resulted in an increase in demand in the order book (i.e., the Spoof 

Orders created or added to an order book imbalance in which orders to buy outweigh orders to 

sell, or otherwise altered the status quo by increasing demand). This increase was visible to other 

market participants and led them to conclude that the price was likely to rise. This conclusion, in 

turn, impacted market participants’ decisions, including prompting some to attempt to purchase 

contracts before the predicted rise in price happened. 

36. In such a case, these participants placed orders to buy which enabled orders on the 

opposite side of the Spoof Orders—including Shak’s Genuine Orders—to sell sooner, at a better 

price, or in larger quantities than they otherwise would. This could occur through other market 

participants placing aggressive orders to buy (i.e., orders at a higher price than the pre-existing 

best bid, which crossed the bid-ask spread to directly fill Shak’s Genuine Orders). It could also 

occur through other market participants placing additional resting orders at the best bid, which 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 12 of 54
13 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

might allow Shak to place aggressive Genuine Orders to sell, and to match those Genuine Orders 

sooner or in larger quantities than he otherwise would have been able to do. Even in instances 

when the Spoof Orders did not cause a change in the bid-ask spread, or allow Shak to fill his 

Genuine Orders at a better price than existed before he began spoofing, his Spoof Orders created 

price pressure that could halt or deter price movement that might have occurred had the Spoof 

Orders not been placed. In an example involving Spoof Orders to buy, those Spoof Orders could 

create upward price pressure that could prevent or slow a drop in the bid-ask spread. 

B. Shak Placed Spoof Orders With the Intent to Cancel Them Before They Were 

Executed and Took Steps to Ensure That Happened 

37. At the time Shak placed his Spoof Orders, he intended to cancel them before 

execution. Shak designed the Scheme to ensure his Spoof Orders were canceled prior to 

execution while his Genuine Orders were executed at a high rate, and he took steps to protect his 

Spoof Orders from execution. 

38. First, Shak canceled the Spoof Orders relatively rapidly. As illustrated in the table 

below, the median cancelation time for all of his Spoof Orders was 11.8 seconds, and for Spoof 

Orders at the top level of the book (i.e., those in most danger of being hit), the median 

cancellation time was 10.7 seconds. By contrast, on those rarer occasions when Shak canceled 

his Genuine Orders, the median cancelation time was 55.4 seconds. This means that Shak 

allowed Genuine Orders to rest prior to cancelation for a significantly longer period than his 

Spoof Orders. The consistently faster cancelation times for Shak’s Spoof Orders reflect his intent 

to cancel them from the outset. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 13 of 54
14 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Cancelations of Event Orders 

(values are approximate) 

 Median Time to Cancelation 

Shak’s Spoof Orders 

(All) 

11.8 seconds 

Shak’s Spoof Orders 

(Top Level of Book) 

10.7 seconds 

Shak’s Genuine Orders 55.4 seconds 

39. Second, Shak acted quickly to cancel his Spoof Orders after receiving a fill on his 

Genuine Orders. In Spoof Events where Shak received a complete fill on his Genuine Order, the 

median time between the fill of his Genuine Order and the first cancelation of a Spoof Order was 

2.3 seconds. As a manual trader, Shak clicked his mouse or made a keystroke in order cancel 

each individual Spoof Order, which makes the quick cancelation times for his Spoof Orders even 

more noteworthy. 

40. Third, and relatedly, in some instances Shak placed Spoof Orders in a sequence 

intended to minimize the possibility that that the Spoof Orders would get filled. In several Spoof 

Events that involved multiple Spoof Orders, the Spoof Order closest to the best bid or best offer—

and thus at greatest risk of being filled—was the last Spoof Order placed and/or the first Spoof 

Order canceled, while the Spoof Order furthest from the best bid or best offer—and thus at least 

risk of being filled—was the first Spoof Order placed and/or the last Spoof Order canceled. In 

some cases, Shak canceled his Spoof Orders in price sequence—starting with the Spoof Order 

closest to the best bid or best offer and proceeding in price sequence until reaching the Spoof 

Order furthest from the best bid or best offer. In other words, Shak placed and canceled Spoof 

Orders such that the Spoof Orders at greatest risk of being hit rested on the order book for a 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 14 of 54
15 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

shorter amount of time, while the Spoof Orders that were at the least risk of being hit rested on 

the order book for a longer amount of time. 

41. Fourth, in other instances, Shak canceled Spoof Orders when they received a 

partial fill or when the best bid or best offer moved closer to them such that those Spoof Orders 

were at greater risk of being hit. By contrast, in some instances where the bid-ask spread moved 

away from his Spoof Orders after his Genuine Order was filled, meaning that the Spoof Orders 

were at an even lower risk of being hit than usual, Shak left those Spoof Orders on the market for 

relatively longer periods of time. These patterns suggest that Shak was monitoring the market to 

ensure that his Spoof Orders did not get fills, acting quickly to cancel his Spoof Orders when fills 

appeared more likely to occur in the future, and acting less quickly to cancel his Spoof Orders 

when it appeared that the risk of them getting filled was more remote. 

42. Shak’s Scheme worked as designed, as reflected in vastly diverging rates in which 

Shak’s Genuine and Spoof Orders were partially or fully filled (the “hit rate”). As shown in the 

table below, Shak placed or modified 804 Genuine Orders during the Relevant Period. Of these, 

about 89% were hit. By contrast, approximately 2% of the 1,808 Spoof Orders were hit. Whether 

an order is hit is not dependent on its size; rather, orders at the same price level execute according 

to time priority under the FIFO matching algorithm, and larger orders can receive what is called a 

partial fill (i.e., only two lots of a 20-lot order could be filled, leaving eighteen lots on the 

market). Here, the stark contrast in hit rates illustrates Shak’s success in avoiding execution of 

his Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 15 of 54
16 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Shak Orders Hit in Events 

(percentages are approximate) 

 Total Shak 

Orders in 

Events 

Number of 

Shak Orders Hit

Percentage of 

Shak Orders Hit 

Genuine Orders 804 719 89% 

Spoof Orders 1,808 31 2% 

43. Thus, while Shak canceled almost 98% of his 1,808 Spoof Orders before even a 

partial fill, the Scheme enabled him to successfully fill, either partially or completely, 

approximately 89% of his Genuine Orders during Spoof Events. Shak’s ability to avoid 

executions of his Spoof Orders is striking when comparing his Genuine Orders to his Spoof 

Orders. The stark contrast in hit rates is the result of the different intent Shak had when he placed 

Spoof Orders versus Genuine Orders—i.e., that he placed Genuine Orders with the intent to fill 

them, but placed Spoof Orders with the intent to cancel them. 

44. A number of factors—the different hit rates, the disparate times to cancelation, the 

instances in which Shak canceled Spoof Orders as the risk that they might be filled increased, and 

the predictable sequence inherent in Shak’s spoofing pattern, repeated over and over—

demonstrate that Shak was carrying out a predetermined strategy to cancel the Spoof Orders, and 

that this strategy was not dependent on market conditions except insofar as those market 

conditions reflected or related to his intent to fill his Genuine Orders and cancel his Spoof Orders. 

C. Shak Intended to Send False Information About Supply and Demand, or at Least 

Was Reckless to the Possibility That His Spoof Orders Would Send Such False 

Information 

45. By engaging in the Scheme as described herein, Shak entered Spoof Orders either 

to intentionally send a false signal to the market that he actually wanted to buy or sell the number 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 16 of 54
17 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

of contracts specified in those orders, or while recklessly disregarding the fact that entering these 

orders would send such a false signal to market participants—a signal that injected false 

information about supply and demand into the market. 

46. The risk that his Spoof Orders could mislead other market participants into 

believing there was genuine supply or demand was so obvious that Shak must have been aware of 

it. Shak knew that his Spoof Orders would appear in the order book and that traders often 

considered order book information in making trading decisions. Shak knew that although his 

Spoof Orders were visible to the rest of the market, his identity as the originator of those orders 

was not. Accordingly, Shak knew that other market participants could not see that the same 

trader had placed all of the Spoof Orders, or that the same trader had placed the Spoof Orders and 

the Genuine Orders, which might have tipped off market participants that his Spoof Orders were 

not bona fide. In instances when Shak’s Genuine Orders were icebergs, Shak also knew that 

other market participants could not see that his Genuine Orders were iceberg orders, and did not 

know that only a small portion of the full order was visible to the market. 

47. Shak knew or recklessly disregarded that the false information about supply and 

demand would trick other market participants into trading against his Genuine Orders on the 

opposite side of the market—allowing those Genuine Orders to fill sooner, at a better price, or in 

larger quantities than they otherwise would. 

D. Examples of Shak’s Spoofing Scheme 

48. A few examples of Shak’s spoofing activity are described below. All of these 

examples share a common theme that is generally consistent with Shak’s spoofing activity 

throughout the Relevant Period: Shak placed a small Genuine Order (or Orders) on one side of 

the market, quickly preceded or followed by one or more Spoof Orders on the opposite side of the 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 17 of 54
18 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

market. These Spoof Orders created or exacerbated a market imbalance (and concomitant price 

pressure) and were cancelled within close proximity of the Genuine Order being filled. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 18 of 54
19 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 1: March 3, 2017 

Chart 1 (07:52:53.486 − 07:54:03.574)

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 19 of 54

o Placement * Modification 

Bi Cancellation 

V Bought l:l. Sold 

- Sel!Side - BuySide 

- Best Bid/Best Ask. 

1,229.50 

1,229.40 

1,229.30 

1,229.20 

1,229.10 

Bid-Ask Spread 1,229.00 

8 

·c 1,228.90 

Po.. 

1,228.80 

1,228.70 

1,228.60 

1,228.50 

1,228.40 

1,228.30 

[A] Shak modifies a preexisting one-lot Genuine Order from 

$1.229.40 to $1,229.30. 

[C] Shak later modifies it to $1.229.10. 

- •••- _,_.,,. ______________ _ 

_ [D] Shak modifies his Genuine Order to 

$1.229.00 and gets filled immediately. 

[E] Le s than one second 

after his Genuine Order is 

20 

20 20 20 20 

[B] Shak begins placing a se1ies of 20-lot 

Spoof Orders to buy. 

Shak places ten 20-lot Spoof Orders to 

buy a total of 200 lots. 

20 

07:53:00.0 07:53 :10.0 07:53:20.0 

20 

20 

20 

07:53 :30.0 

Ti.me 

20 

07:53:40.0 07:53:50.0 07:54:00.0 
20 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

49. At 7:52:57.348 AM on March 3, 2017, Shak modified a preexisting one-lot 

Genuine Order to sell the April 2017 Gold contract, changing it from a price of $1,229.40 to 

$1,229.30.5 At that point the bid-ask spread was at $1,228.90/$1,229.00, meaning Shak’s 

Genuine Order was three ticks away from the best offer and would be filled if the best bid moved 

up by four ticks and any other orders ahead of him in the queue at $1,229.30 were filled. In other 

words, it would benefit Shak if the bid-ask spread moved up towards his Genuine Order, allowing 

him to sell at a higher price than was currently available. 

50. Between 7:52:56.906 and 7:53:00.696, the bid-ask spread vacillated between 

$1,228.90/$1,229.00 and $1,228.80/$1,228.90, settling at $1,228.80/$1,228.90 at 7:53:00.696. 

Starting at 7:53:21.124, Shak began placing a series of 20-lot Spoof Orders to buy the April 2017 

Gold contract, starting at $1,228.40 and moving closer to the best bid. Between 7:53:21.124 and 

7:53:50.324, Shak placed ten 20-lot Spoof Orders to buy a total of 200 lots, in the following 

sequence: 

 $1,228.40 

 $1,228.60 

 $1,228.70 

 $1,228.50 

 $1,228.80 

 $1,228.60 

 $1,228.80 

 $1,228.90 

 $1,228.80 

 $1,228.80.6 

51. In total, Shak placed one 20-lot Spoof Order at each of $1,228.40, $1,228.50, 

$1,228.70, and $1,228.90; two 20-lot Spoof Orders at $1,228.60, and four 20-lot Spoof Orders at 

$1,228.80. As Shak was placing these Spoof Orders—and perhaps in response to the false signals 

 

5

 Chart 1 at [A]. 

6

 Chart 1 at [B]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 20 of 54
21 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

of demand they conveyed—the bid-ask spread ticked up, vacillating between $1,228.90/$1,229.00 

and $1,229.00/$1,229.10. Although Shak placed Spoof Orders at $1,228.80 and $1,228.90, he 

waited to place those Spoof Orders until the best bid was above those price levels, at which point 

they would be at less risk of being filled. 

52. At 7:53:38.312, in the midst of placing the 20-lot Spoof Orders, Shak modified his 

Genuine Order down to a price of $1,229.10, which was at that time the best offer.7 After 

allowing the Genuine Order to rest at that price for approximately 16 seconds, Shak modified that 

order again to a price of $1,229.00 at 7:53:54.558.8 Because the best bid at that point in time was 

$1,229.00, Shak’s one-lot Genuine Order to sell became an aggressive order that crossed the bidask spread and filled immediately at 7:53:54.558. 

53. Less than a second after the Genuine Order was filled, Shak began canceling his 

20-lot Spoof Orders.9 He started by canceling his Spoof Order at $1,228.90 at 7:53:55.488, and 

cancelled the last Spoof Order at 7:53:58.693. Shak canceled all ten Spoof Orders in the span of a 

little more than three seconds, meaning that on average it took approximately 300 milliseconds to 

cancel each Spoof Order. Shak canceled the Spoof Orders in order by price, starting with the 

order closest to the bid-ask spread and at greatest risk of being hit, and ending with the order 

furthest from the bid-ask spread and at the least risk of being hit. The fact that Shak prioritized 

canceling the Spoof Orders that were at greatest risk of being hit suggests that he did not want 

those orders to be filled, and to the contrary, placed all of the Spoof Orders with the intent to 

cancel them. Moreover, the swiftness with which Shak canceled his Spoof Orders, and the order 

in which he did so, allowed him to avoid being filled on his Spoof Orders. A little more than one 

 

7

 Chart 1 at [C]. 

8

 Chart 1 at [D]. 

9

 Chart 1 at [E]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 21 of 54
22 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

second after he canceled his last Spoof Order, the best offer dropped to $1,228.90, meaning that 

his Spoof Order to buy at that price level might have been filled if he had not canceled it so 

quickly. 

54. In summary, while waiting for a fill on one-lot Genuine Order to sell, Shak placed 

upward pressure on the price by placing ten Spoof Orders to buy a total of 200 lots, which, at the 

time he entered the orders he intended to cancel, and, in fact, did cancel without any lots being 

filled. When Shak began placing his Spoof Orders, the best price he could have filled his 

Genuine Order at was $1,228.80 (i.e. he would have to have sold lower than he wanted). As he 

began placing Spoof Orders to buy, the bid-ask spread moved up such that his Genuine Order 

could ultimately be fully filled at $1,229.00. In other words, Shak’s spoofing allowed him to fill 

his Genuine Order at a better price than he otherwise might have obtained if he had not placed the 

Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 22 of 54
23 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 2: March 24, 2017 

Chart 2 (08:30:15.082 − 08:30:47.777)

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 23 of 54

0 Placement 

* Modification 

181 Cancellation 

V Bought 

" Sold 

- Sel!Side 

- BuySide 

- Best Bid/Best Ask 

Bid- Ask Spread 

1,245.40 

1,245.30 

1,245.20 

1,245.10 

1,245.00 

1,244.90 

1,244.80 

8 

·;: 1,244.70 

i:i.. 

1,244.60 

1,244.50 

1,244.40 

1,244.30 

1,244.20 

1,244.10 

1,244.00 

[5] 

[A] Shak modifies a preexisting fi\·e-lot Genuine Order 

from $ 1.245.30 to $1.245.00. 

[B] Shak places a 50-lot Spoof Order to buy. and 

[C] later cancels it. 

50 

50 

[D] Shak begins placing a se1ies of Spoof 

Orders to buy. Shak places four Spoof 

Orders to buy a total of 250 lots. 

100 

08:30:15.0 08:30:20.0 08:30:25.0 08:30:30.0 

Time 

50 

I 

[E] Shak modifies his Genuine Order to 

$1,244.70 and gets filled. 

08:30:35.0 

[F] Seconds after his Genuine 

Order is filled. Shak begins 

canceling the Spoof Orders. 

08:30:40.0 08:30:45.0 
24 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

55. At 8:30:17.046 AM on March 24, 2017, Shak modified a preexisting five-lot 

Genuine Order to sell the April 2017 Gold contract, changing it from a price of $1,245.30 to 

$1,245.00.10 At that point in time the bid-ask spread was at $1,244.70/$1,244.80, meaning Shak’s 

Genuine Order was two ticks away from the best offer and would be filled if the best bid moved 

up by three ticks and any other orders ahead of him in the queue at $1,245.00 were filled. In other 

words, it would benefit Shak if the bid-ask spread moved up towards his Genuine Order, allowing 

him to sell at a higher price than was currently available. 

56. At 8:30:20.375, Shak placed a 50-lot Spoof Order to buy at $1,244.50.11 Shak 

canceled that order at 8:30:23.191, a few seconds after the best bid momentarily dropped to 

$1,244.50, putting the Spoof Order at greater risk of being hit.12 This suggests that he did not 

intend to fill this Spoof Order but was instead using it to send false signals of increased demand in 

order to trick market participants into executing against the Genuine Order that he actually wanted 

filled. 

57. Starting at 8:30:26.155, Shak began placing a series of Spoof Orders to buy, 

starting at $1,244.10 and moving closer to the best bid. Between 8:30:26.155 and 8:30:32.855, 

Shak placed four Spoof Orders to buy a total of 250 lots, in the following sequence: 

 100-lot order at $1,244.10 

 50-lot order at $1,244.20 

 50-lot order at $1,244.30 

 50-lot order at $1,244.40.13 

58. At 8:30:36.372, after he finished placing the Spoof Orders, Shak modified his 

Genuine Order down to a price of $1,244.70, which was at that time the best offer. After less than 

 

10 Chart 2 at [A]. 

11 Chart 2 at [B]. 

12 Chart 2 at [C]. 

13 Chart 2 at [D]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 24 of 54
25 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

100 milliseconds, another trader crossed the bid-ask spread (perhaps in response to the false 

signals of demand conveyed by Shak’s Spoof Orders) and filled Shak’s Genuine Order at 

8:30:36.432.14 

59. Seconds after the Genuine Order was filled, Shak began canceling his Spoof 

Orders.15 He started by canceling his Spoof Order at $1,244.40 at 8:30:39.924, and cancelled the 

last Spoof Order at 8:30:42.819. Shak canceled all four remaining Spoof Orders in the span of a 

little less than three seconds, meaning that on average it took approximately 750 milliseconds to 

cancel each Spoof Order. Shak canceled the Spoof Orders in order by price, starting with the 

order closest to the bid-ask spread and at greatest risk of being hit, and ending with the order 

furthest from the bid-ask spread and at the least risk of being hit. The fact that Shak prioritized 

canceling the Spoof Orders that were at greatest risk of being hit suggests that he did not want 

those orders to be filled, and to the contrary, placed all of the Spoof Orders with the intent to 

cancel them. Moreover, the swiftness with which Shak canceled his Spoof Orders, and the order 

in which he did so, allowed him to avoid being filled on his Spoof Orders. Less than one second 

after he canceled his last Spoof Order, the best offer dropped to $1,244.20, meaning that his 

Spoof Orders at $1,244.40, $1,244.30, and $1,244.20 might have been filled if he had not 

canceled them so quickly. 

60. In summary, while waiting for a fill on a five-lot Genuine Order to sell, Shak 

placed upward pressure on the price by placing five Spoof Orders to buy a total of 300 lots, which 

he intended to cancel, and which he did cancel without any lots being filled. Shak took additional 

steps to ensure that his Spoof Orders would not be filled, including leaving the Spoof Orders 

 

14 Chart 2 at [E]. 

15 Chart 2 at [F]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 25 of 54
26 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

closest to the best bid on the order book for the shortest period of time, and quickly canceling one 

of his Spoof Orders after the best bid moved to the same price level, putting that Spoof Order at 

increased risk of being hit. At 8:30:26.155, when Shak began placing the series of Spoof Orders 

to buy, the best price he could have filled his Genuine Order at was $1,244.50 (i.e. he would have 

to have sold lower than he wanted). As he began placing Spoof Orders to buy, the market moved 

such that his Genuine Order could ultimately be fully filled at $1,244.70. In other words, Shak’s 

spoofing allowed him to fill his Genuine Order at a better price than he otherwise might have 

obtained if he had not placed the series of Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 26 of 54
27 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 3: September 18, 2017 

Chart 3 (06:30:20.529 − 06:31:43.479) 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 27 of 54

0 Placeme.nI 

* Modification 

181 Cancellation 

V Bought 

" Sold 

- SellSide 

- BuySide 

- Best Bid/Best Ask 

Bid-Asl: Spread 

17.590 

17.585 

17.580 

17.575 

17.570 

17.565 

17.560 

17.555 

17.550 

17.545 

[A) Shak modifies two preexisting one-lot Genuine 

Orders from $17.585 to $17.580. 

[1] 

[BJ Shak begins placing a series of Spoof 

Orders to buy. Shak places eight Spoof 

Orders to buy 340 lots in total. 

06:30:20.0 06:30:40.0 

50 

50 

50 

50 

50 

06:31:00.0 

Time 

- [C) Shak modifies his Genuine Orders to 

$17.570 and gets filled immediately. 

1 

20 20 

50 

[D) Less than 1.2 seconds after his Genuine Order is 

filled. Shak begins canceling the Spoof Orders. 

06:31:20.0 06:31 :40.0 
28 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

61. At 6:30:32.856 AM on September 18, 2017, Shak modified two one-lot Genuine 

Orders to sell the December 2017 Silver contract, changing them from a price of $17.585 to 

$17.580.16 At that point in time the bid-ask spread was at $17.570/$17.575, meaning Shak’s 

Genuine Orders were one tick away from the best offer and two ticks away from the best bid, and 

would be filled if the best bid moved up by two ticks and any other orders ahead of him in the 

queue at $17.580 were filled. In other words, it would benefit Shak if the bid-ask spread moved 

up towards his Genuine Order, allowing him to sell at a higher price than was currently available. 

62. At 6:30:40.323, the bid-ask spread dropped, reaching $17.565/$17.570 before 

rising back to $17.570/$17.575 at 6:30:42.173. Shortly thereafter, Shak began placing a series of 

Spoof Orders to buy the December 2017 Silver contract. Between 6:30:46.389 and 6:31:19.636, 

Shak placed eight Spoof Orders to buy a total of 340 lots, in the following sequence: 

 50-lot order at $17.560 

 50-lot order at $17.555 

 50-lot order at $17.550 

 50-lot order at $17.560 

 50-lot order at $17.550 

 50-lot order at $17.555 

 20-lot order at $17.565 

 20-lot order at $17.565.17 

63. In total, Shak placed two 50-lot Spoof Orders at each of $17.550, $17.555, and 

$17.560; and two 20-lot Spoof Orders at $17.565. Although Shak placed Spoof Orders at 

$17.565, he waited until the best bid was above that price level to place those Spoof Orders. 

64. While he was placing the Spoof orders, at 6:31:05.446, Shak modified his Genuine 

Orders to a price of $17.575, which was at that time the best offer. At 6:31:30.746, Shak 

modified the Genuine Orders again, moving them to a price of $17.580. After allowing the 

 

16 Chart 3 at [A]. 

17 Chart 3 at [B]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 28 of 54
29 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Genuine Orders to rest at that price for approximately 4.5 seconds, Shak modified the Genuine 

Orders again to a price of $17.570 at 6:31:35.275. Because the best bid at that point in time was 

$17.570, Shak’s Genuine Orders became aggressive orders that crossed the bid-ask spread and 

filled immediately at 6:31:35.275.18

65. Less than 1.2 seconds after the Genuine Orders was filled, Shak began canceling 

his Spoof Orders.19 He started by canceling his Spoof Orders at $17.565 at 6:31:36.432, and 

cancelled the last Spoof Order at 6:31:39.576. Shak canceled all eight Spoof Orders in the span 

of a little more than three seconds, meaning that on average it took approximately 400 

milliseconds to cancel each Spoof Order. Shak canceled the Spoof Orders in order by price, 

starting with the orders closest to the bid-ask spread and thus the order and at greatest risk of 

being hit, and ending with the order furthest from the bid-ask spread and at the least risk of being 

hit. The fact that Shak prioritized canceling the Spoof Orders that were at greatest risk of being 

hit suggests that he did not want those orders to be filled, and to the contrary, placed all of the 

Spoof Orders with the intent to cancel them. 

66. In summary, while waiting for a fill on two one-lot Genuine Orders to sell, Shak 

placed upward pressure on the price by placing eight Spoof Orders to buy a total of 340 lots, 

which he intended to cancel, and which he did cancel without any lots being filled. Shak took 

additional steps to ensure that his Spoof Orders would not be filled, including leaving the Spoof 

Orders closest to the best bid on the order book for the shortest period of time. 

67. Although Shak’s Spoof Orders did not actually move the bid-ask spread—it 

remained at $17.570/$17.575 from the time he began placing his Spoof Orders until he filled his 

 

18 Chart 3 at [C]. 

19 Chart 3 at [D]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 29 of 54
30 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Genuine Orders at $17.570—that is irrelevant. Shak placed the Spoof Orders with the intent to 

cancel them, with the intent to convey false signals of demand to the marketplace, and with the 

intent to apply upward price pressure in order to get a better price on his Genuine Orders. Indeed, 

shortly before Shak placed his Spoof Orders, the bid-ask spread momentarily dropped to 

$17.565/$17.570. If Shak had not placed his Spoof Orders, the bid-ask spread may have dropped 

further, meaning that Shak’s spoofing may have allowed him to fill his Genuine Orders at a better 

price or more quickly than he could have if he had not placed the Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 30 of 54
31 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 4: October 5, 201720

Chart 4A (09:44:46.238 - 09:45:54.252)

 

20 Orders with parentheses are iceberg orders—the first number is the total number of lots in the order, and the number within the 

parentheses is the number of orders that was visible to the marketplace. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 31 of 54

0 Placement: 

* Modification 

181 Cancellation 

V Bought 

I> Sold 

- Sel!Side 

- BuySide 

- Best Bid/Best Ask 

Bid- Ask Spread 

1,277.00 

1,276.90 

1,276.80 

1,276.70 

8 

·c 1,276.60 

p.. 

1,276.50 

1,276.40 

1,276.30 

1,276.20 

38 (1) 

38 (1) 

• H· 

25 

-

I 

[A] Shak places a 25-lot Spoof Order to 

buy. and 

[C] later places five additional Spoof 

Orders to buy a total of 190 lots. 

09:44:50.0 09:45:00.0 

50 

[BJ Shak places an iceberg Genuine Order to sell 38 lots. 

with one lot visible at $1.276.90. 

40 25 

50 25 

~ 

- "" -

I [D] Shak begins canceling his Spoof Orders. I 

-- --

09:45:10.0 

--

09:45:20.0 

Ti.me 

09:45:30.0 09:45:40.0 09:45:50.0 

38 
32 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

68. At 9:44:50.525, Shak placed a 25-lot Spoof Order to buy the December 2017 Gold 

contract at $1,276.40.21 At 9:45:03.418. Shak placed an iceberg Genuine Order to sell 38 lots of 

the December 2017 Gold contract, with one lot visible to the market at $1,276.90.22 At that point 

in time the bid-ask spread was at $1,276.60/$1,276.70, meaning Shak’s Genuine Order was two 

ticks away from the best offer and three ticks away from the best bid, and would be filled if the 

best bid moved up by three ticks and any other orders ahead of him in the queue at $1,276.90 

were filled. In other words, it would benefit Shak if the bid-ask spread moved up towards his 

Genuine Order, allowing him to sell at a higher price than was currently available. 

69. At 9:45:06.867, Shak began placing more Spoof Orders to buy the December 2017 

contract. Between 9:45:06.867 and 9:45:33.476, Shak placed five Spoof Orders to buy a total of 

190 lots, in the following sequence: 

 50-lot order at $1,276.30 

 50-lot order at $1,276.40 

 40-lot order at $1,276.50 

 25-lot order at $1,276.50 

 25-lot order at $1,276.40.23 

70. Including the 25-lot Spoof Order Shak placed at 9:44:50.525, Shak placed one 

order for a total of 50 lots at $1,276.30, three orders for a total of 100 lots at $1,276.40, and two 

orders for a total of 65 lots at $1,276.50. 

71. Despite Shak’s attempt to apply upward price pressure by placing Spoof Orders to 

buy in order to drive prices up towards his Genuine Order, the bid-ask spread actually dropped 

while Shak was in the process of placing his Spoof Orders. At 9:45:36.34.320, the best bid 

 

21 Chart 4A at [A]. 

22 Chart 4A at [B]. Prior to placing his 25-lot Spoof Order, Shak placed an iceberg Genuine 

Order to sell 38 lots of the December 2017 Gold contract at 9:44:47.025 AM, which he 

canceled after placing the 25-lot Spoof Order, at 9:44:53.645. 

23 Chart 4A at [C]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 32 of 54
33 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

moved to $1,276.50, putting Shak’s Spoof Orders at that price level at increased risk of being hit, 

before temporarily moving back up to $1,276.60 and then dropping back down to $1,276.50 at 

9:45:35.382. Shak acted quickly, starting to cancel his Spoof Orders less than 2 seconds after the 

best bid first dropped to $1,276.50, and less than 700 milliseconds after the best bid dropped to 

that level a second time.24 Shak canceled his orders at $1,276.40 at 9:45:36.004, the orders at 

$1,276.50 at 9:45:36.646, and the orders at $1,276.30 at 9:45:38.302. After Shak canceled these 

orders, the bid-ask spread dropped to $1,276.30/$1,276.40 from 9:45:39.598 to 9:45:39.710, then 

moved up to $1,276.40/$1,276.50 briefly, and returned to $1,276.30/$1,276.40 from 9:45:41.995 

to 9:45:51.595, meaning that Shak’s Spoof Orders might have been hit had he not acted quickly to 

cancel them. 

72. Around the same time that Shak was canceling the Spoof Orders, he made several 

modifications to his iceberg Genuine Order to move it closer to the bid-ask spread, moving it 

from $1,276.90 to $1,276.80 at 9:45:29.963, and from $1,276.80 to $1,276.50 at 9:45:43.739. In 

other words, Shak canceled his Spoof Orders as the market got closer to them but modified his 

iceberg Genuine Order multiple times to bring it closer to the bid-ask spread. This suggests that 

he did not intend to fill the Spoof Orders but was instead using them to send false signals of 

increased demand in order to trick market participants into executing against the Genuine Order 

that he actually wanted filled. Although Shak’s attempt to do so was initially unsuccessful, he 

tried again a short time later, this time with greater success. 

 

24 Chart 4A at [D]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 33 of 54
34 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Chart 4B (09:47:30.054 - 09:49:01.332) 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 34 of 54

0 Placement 

* Modification 

181 Cancellation 

V Bought 

I> Sold 

- Sel! Side 

- Buy Side 

- Best Bid/Best Ask 

Bid- Ask Spread 

1,277.10 

1,277.00 

1,276.90 

1,276.80 

1,276.70 

1,276.60 

81,276.50 

·;:: 

11.. 1,276.40 

1,276.30 

1,276.20 

1,276.10 

1,276.00 

1,275.90 

1,275.80 

[A] Shak begins placing a 

serie of Spoof Orders to buy. 

Shak places nine Spoof 

Orders to buy a total of 225 

lots. 

38 

25 

25 

25 

5 

09:47:40.0 

[BJ Shak's iceberg Genuine 

Order gets 13 lots filled. and 

[C] later gets the remaining 25 

lots filled. 

25 (1) 

25 

25 25 

25 25 

09:48:00.0 09:48:20.0 

Time 

[D] Shak begins canceling his Spoof Orders. 

09:48:40.0 09:49:00.0 
35 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

73. At 9:47:27.738 the bid-ask spread momentarily bottomed out at 

$1,276.00/$1,276.10, before rising to $1,276.20/$1,276.30 at 9:47:27.936. Shortly thereafter, 

Shak began placing a series of Spoof Orders to buy the December 2017 contract. Between 

9:47:34.921 and 9:48:09.661, Shak placed nine Spoof Orders to buy a total of 225 lots, in the 

following sequence: 

 25-lot order to buy at $1,275.90 

 25-lot order to buy at $1,276.10 

 25-lot order to buy at $1,276.00 

 25-lot order to buy at $1,276.20 

 25-lot order to buy at $1,276.40 

 25-lot order to buy at $1,276.20 

 25-lot order to buy at $1,276.30 

 25-lot order to buy at $1,276.30 

 25-lot order to buy at $1,276.20.25 

74. In total, Shak placed three 25-lot orders at $1,276.20, two 25-lot orders at 

$1,276.30, and one 25-lot order at each of the other price levels. The bid-ask spread was at 

$1,276.20/$1,276.30 when Shak began placing his Spoof Orders. Although Shak placed Spoof 

Orders at $1,276.20 and $1,276.30, he did not do so until the bid-ask spread moved above those 

price levels (perhaps in response to the false signals of demand conveyed by Shak’s Spoof 

Orders). At that point, Shak could place Spoof Orders at those price levels with less risk that they 

would be hit. Similarly, Shak did not place the 25-lot Spoof Order at $1,276.40 until almost two 

seconds after the bid-ask spread moved up to $1,276.50/$1,276.60. 

75. Perhaps recognizing that the market was moving quickly upward in response to the 

false signals of increased demand communicated by Shak’s Spoof Orders, Shak increased the 

price of his iceberg Genuine Order in an attempt to sell at a higher price, moving it from 

 

25 Chart 4B at [A]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 35 of 54
36 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

$1,276.50 to $1,276.60 at 9:47:46.043. At 9:47:51.739, another trader or traders crossed the bidask spread (perhaps in response to the false signals of demand conveyed by Shak’s Spoof Orders) 

and partially filled Shak’s Genuine Order, hitting 13 lots at $1,276.60 and leaving Shak with 25 

lots unfilled.26 Despite receiving a partial fill of 13 lots, Shak’s Genuine Order remained an 

iceberg, meaning that only one lot was visible to the rest of the market. At 9:47:53.207, Shak 

again modified his iceberg Genuine Order in an attempt to sell at a higher price, moving it from 

$1,276.60 to $1,276.70. After the order rested there for almost six seconds, Shak modified it back 

down to $1,276.60 at 9:47:58.990. Between 9:48:10.952 and 9:48:10.953, another trader or 

traders crossed the bid-ask spread (perhaps in response to the false signals of demand conveyed 

by Shak’s Spoof Orders) and filled the remaining 25 lots of Shak’s iceberg order.27 

76. After Shak’s iceberg Genuine Order filled, the market continued to move upward, 

with the bid-ask spread reaching a high of $1,276.90/$1,277.00 at 9:48:28.402. At that point, the 

Spoof Order closest to the bid-ask spread, Shak’s 25-lot buy order at $1,276.40, was six ticks 

away from the best offer, and thus at relatively low risk of being hit. That changed, however, as 

the bid-ask spread dropped several times over the span of a few seconds, moving to 

$1,276.80/$1,276.90 at 9:48:33.455, to $1,276.70/$1,276.80 at 9:48:43.646, and 

$1,276.60/$1,276.70 at 9:48:49.964. Perhaps recognizing that the market was moving towards 

his Spoof Orders and the risk of the Spoof Orders being hit was increasing, Shak started canceling 

his Spoof Orders at 9:48:50.225.28 All nine Spoof Orders were canceled in approximately 11 

seconds, meaning that on average it took approximately 1.2 seconds to cancel each Spoof Order. 

 

26 Chart 4B at [B]. 

27 Chart 4B at [C]. 

28 Chart 4B at [D]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 36 of 54
37 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Shak canceled the first seven Spoof Orders in order by price, starting with the order closest to the 

bid-ask spread that was at greatest risk of being hit.29 The fact that Shak prioritized canceling the 

Spoof Orders that were at greatest risk of being hit suggests that he did not want those orders to 

be filled, and to the contrary, placed all of the Spoof Orders with the intent to cancel them. 

77. In summary, while waiting for a fill on a 38-lot iceberg Genuine Order to sell that 

had only one lot visible on the market, Shak first placed upward pressure on the price by placing 

six Spoof Orders for a total of 215 lots, which he intended to cancel, which he canceled without 

any lots being filled, and which he waited to cancel until the bid-ask spread began to move 

towards those orders, placing them at increased risk of being filled. After canceling those six 

Spoof Orders, and while still waiting for a fill on his 38-lot iceberg Genuine Order, Shak again 

placed upward pressure on the price by placing nine more Spoof Orders for a total of 225 lots, 

which he intended to cancel, and which were canceled without any lots being filled. As with the 

first series of Spoof Orders, Shak canceled the second series of Spoof Orders as it became 

apparent that the bid-ask spread was moving towards those orders, placing them at increased risk 

of being filled. 

78. When Shak began placing the second series of Spoof Orders, the best price he 

could have filled his Genuine Order at was $1,276.20 (i.e. he would have to have sold lower than 

he wanted). As he began placing the second series of Spoof Orders , the bid-ask spread moved 

such that his Genuine Order could ultimately be fully filled at $1,276.60. In other words, Shak’s 

spoofing allowed him to fill his Genuine Order at a better price, more quickly, or in a larger 

quantity than he otherwise might have been able to if he had not placed the Spoof Orders.

 

29 The last two Spoof Orders were canceled by another trader with whom Shak had a trading 

partnership. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 37 of 54
38 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 5: January 22, 2018 

Chart 5 (05:17:10.185 − 05:18:24.493) 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 38 of 54

0 Placement 

* Modification 

181 Cancellation 

V Bought 

" Sold 

- SeUSide 

- Buy Side 

- Best Bid/Best Ask 

Bid- Ask Sp:read 

17.075 

17.070 

17.065 

17.060 

17.055 

17.050 

17.045 

17.040 

I [A) Shak places a one-lot Genuine I 

Order to sell at $17.070. 

1 -----------

[BJ Shak begins placing a series of 50-lot 

Spoof Orders ro buy. Shak places six 

Spoof Orders to buy a toral of 300 lots. 

05:17:20.0 

[C) Shak modifies the one-lot Genuine Order to 

$17.065, and 

[DJ larer modifies it ro $17.060. at which point he 

gets filled immediately. 

/ \ 

\ 

50 50 50 

50 50 

- - [E) Less than 2 seconds after his Genuine Order is 

filled. Shak begins canceling the Spoof Orders. 

05:17:40.0 05:18:00.0 05:18:20.0 

Time 
39 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

79. At 5:17:12.964 AM on January 22, 2018, Shak placed a one-lot Genuine Order to 

sell the March 2018 Silver contract at $17.070.30 At that point in time the bid-ask spread was at 

$17.065/$17.070, meaning Shak’s Genuine Order was at the best offer and one tick away from 

the best bid, and would be filled if another trader or traders crossed the bid-ask spread and any 

other orders ahead of him in the queue at $17.070 were filled. In other words, it would benefit 

Shak if the bid-ask spread moved up towards his Genuine Order, allowing him to sell at a higher 

price than was currently available. 

80. At 5:17:31.260 the bid-ask spread moved to $17.060/$17.065. Shortly thereafter, 

Shak began placing a series of Spoof Orders to buy the March 2018 Silver contract. Between 

5:17:44.407 and 5:18:12.169, Shak placed six Spoof Orders to buy a total of 300 lots, in the 

following sequence: 

 50-lot order to buy at $17.055 

 50-lot order to buy at $17.050 

 50-lot order to buy at $17.055 

 50-lot order to buy at $17.050 

 50-lot order to buy at $17.055 

 50-lot order to buy at $17.045.31 

81. In total, Shak placed three 50-lot Spoof Orders at $17.055, two 50-lot Spoof 

Orders at $17.050; and one 50-lot Spoof Order at $17.045. 

82. At 5:17:57.565, Shak modified his Genuine Order to a price of $17.065, which was 

at that time the best offer.32 After allowing the Genuine Order to rest at that price for 

approximately 20 seconds, Shak modified the Genuine Order again to a price of $17.060 at 

5:18:16.998. Because $17.060 was the best bid, Shak’s Genuine Order became an aggressive 

 

30 Chart 5 at [A]. 

31 Chart 5 at [B]. 

32 Chart 5 at [C]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 39 of 54
40 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

order that crossed the bid-ask spread and filled immediately at 5:18:16.998.33 After Shak filled 

his Genuine Order, the bid-ask spread ticked down again, dropping to $17.055/$17.060 at 

5:18:18.365. 

83. Less than 2 seconds after the Genuine Orders was filled, and one millisecond 

before the best bid dropped to $17.055, Shak began canceling his Spoof Orders.34 He started by 

canceling his Spoof Orders at $17.055 at 5:18:18.364, which were at a higher risk of being hit by 

virtue of being closest to the best bid. Shak cancelled the last Spoof Order at 5:18:20.286. Shak 

canceled all six Spoof Orders in the span of less than two seconds, meaning that on average it 

took less than 350 milliseconds to cancel each Spoof Order. Shak canceled the Spoof Orders in 

order by price, starting with the orders that were at greatest risk of being hit, and ending with the 

order furthest from the bid-ask spread that was at the least risk of being hit. The fact that Shak 

prioritized canceling the Spoof Orders that were at greatest risk of being hit suggests that he did 

not want those orders to be filled, and to the contrary, placed all of the Spoof Orders with the 

intent to cancel them. 

84. In summary, while waiting for a fill on a one-lot Genuine Order to sell, Shak 

placed upward pressure on the price by placing six Spoof Orders to buy a total of 300 lots, which 

he intended to cancel, and which he did cancel without any lots being filled. Shak took additional 

steps to ensure that his Spoof Orders would not be filled, including canceling the Spoof Orders 

closest to the bid-ask spread first, and acting quickly to cancel his Spoof Orders when it became 

apparent that the market was moving towards them. 

 

33 Chart 5 at [D]. 

34 Chart 5 at [E]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 40 of 54
41 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

85. Although Shak’s Spoof Orders did not actually move the bid-ask spread—it 

remained at $17.060/$17.065 from the time he began placing his Spoof Orders until he filled his 

Genuine Order at $17.060—that is irrelevant. Shak placed the Spoof Orders with the intent to 

cancel them, with the intent to convey false signals of demand to the marketplace, and with the 

intent to apply upward price pressure in order to get a better price on his Genuine Orders. Indeed, 

shortly before Shak placed his Spoof Orders, the bid-ask spread dropped to $17.060/$17.065, and 

it dropped again to $17.055/$17.060 just milliseconds after Shak began canceling his Spoof 

Orders, and remained there thereafter. If Shak had not placed his Spoof Orders, the bid-ask 

spread may have dropped sooner or further, meaning that Shak’s spoofing may have allowed him 

to fill his Genuine Order at a better price or more quickly than he could have if he had not placed 

the Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 41 of 54
42 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 6: February 21, 2018 

Chart 6 (03:19:32.448 − 03:22:57.819) 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 42 of 54

0 Placement 

* Modific.ation 

18! Cancellation 

V Bought 

" Sold 

- Sell Side 

- BuySide 

- Best Bid/Best Ask 

Bid-Ask Spread 

16.430 

16.425 

16.420 

16.415 

16.410 

8 

·;:: 16.405 

p... 

16.400 

16.395 

16.390 

16.385 

16.380 

50 

--El -

[BJ Shak begins placing a series of Spoof Orders to sell. 

Shak places six Spoof Orders to sell a total of 250 lots. [I] Less than five seconds 

after the Genuine Order is 

filled. Shak begins 

canceling his Spoof Orders. 

3 

3 

[A] Shak places a 

three-lot Genuine 

Order to buy at 

$16.395. 

[E] Less than four seconds after 

the Genuine Order is filled. Shak 

begins canceling his Spoof Orders. 

[C) Shak modifies the three-lot 

Genuine Order to $16.400. and 

[D] gets filled 13 seconds later. 

03 :20:00.0 03:20:50.0 

_ [F] Shak places a three-lot 

Genuine Order to sell. 

3 

50 

[H] Shak's Genuine 

Order gets filled. 

50 

[G] Shak begins placing a I--S0 ___ 5.,o __ _,. s .. o _________ lKI 

series of Spoof Orders. to """ 

buy. Shak places seven 

Spoof Orders to buy a 

total of3 50 lots. 

03 :21:40.0 

Ti.me 

50 50 

03:22:30.0 
43 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

86. At 3:19:34.946 AM on February 21, 2018, Shak placed a three-lot Genuine Order 

to buy the March 2018 Silver contract at $16.395.35 At that point in time the bid-ask spread was 

at $16.395/$16.400, meaning Shak’s Genuine Order was at the best bid and would be filled if a 

trader or traders crossed the bid-ask spread and any other orders ahead of him in the queue at 

$16.395 were filled. In other words, it would benefit Shak if the market moved towards his 

Genuine Order, allowing him to buy at a lower price than was currently available. 

87. At 3:19:39.023, Shak began placing a series of Spoof Orders to sell the March 

2018 Silver contract. Between 3:19:39.023 and 3:19:58.855, Shak placed six Spoof Orders to sell 

a total of 250 lots, in the following sequence: 

 25-lot order at $16.410 

 25-lot order at $16.415 

 50-lot order at $16.410 

 50-lot order at $16.415 

 50-lot order at $16.420 

 50-lot order at $16.425.36

88. At 3:19:40.533, shortly after Shak placed his first Spoof Order, the bid-ask spread 

moved up to $16.400/$16.405. In the midst of placing his Spoof Orders, at 3:19:46.312, Shak 

modified his Genuine Order to the best bid, $16.400.37 After the modified Genuine Order rested 

on the order book for approximately 13 seconds, another trader or traders crossed the bid-ask 

spread (perhaps in response to the false signals of supply conveyed by Shak’s Spoof Orders) and 

filled Shak’s Genuine Order at 3:19:59.508.38

89. Less than four seconds after the Genuine Orders were filled, Shak began canceling 

his Spoof Orders.39 He started by canceling his Spoof Orders at $16.410 at 3:20:03.105, and 

 

35 Chart 6 at [A]. 

36 Chart 6 at [B]. 

37 Chart 6 at [C]. 

38 Chart 6 at [D]. 

39 Chart 6 at [E]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 43 of 54
44 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

cancelled the last Spoof Order at 3:20:06.537. Shak canceled all six Spoof Orders in the span of 

approximately three and a half seconds, meaning that on average it took less than 600 

milliseconds to cancel each Spoof Order. Shak canceled the Spoof Orders in order by price, 

starting with the orders at the best bid that were at greatest risk of being hit, and ending with the 

order furthest from the bid-ask spread that was at the least risk of being hit. The fact that Shak 

prioritized canceling the Spoof Orders that were at greatest risk of being hit suggests that he did 

not want those orders to be filled, and to the contrary, placed all of the Spoof Orders with the 

intent to cancel them. 

90. A few minutes after successfully placing and canceling Spoof Orders on the sell 

side of the market in order to fill a three-lot Genuine Order on the buy side of the market, Shak 

reversed course and placed Spoof Orders on the buy side of the market in order to fill a three-lot 

Genuine Order on the sell-side of the market. 

91. At 3:21:55.679 AM on February 21, 2018, Shak placed a three-lot Genuine Order 

to sell the March 2018 Silver contract at $16.405.40 At that point in time the bid-ask spread was 

$16.395/$16.400, meaning Shak’s Genuine Order was one tick away from the best offer and two 

ticks away from the best bid, and would be filled if the best bid moved up by two ticks and any 

other orders ahead of him in the queue at $16.405 were filled. In other words, it would benefit 

Shak if the bid-ask spread moved up towards his Genuine Order, allowing him to sell at a higher 

price than was currently available. 

92. At 3:21:59.867, Shak began placing a series of Spoof Orders to buy the March 

2018 Silver contract. Between 3:21:59.867 and 3:22:22.838, Shak placed seven Spoof Orders to 

buy a total of 350 lots, in the following sequence: 

 

40 Chart 6 at [F]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 44 of 54
45 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

 50-lot order at $16.390 

 50-lot order at $16.385 

 50-lot order at $16.395 

 50-lot order at $16.390 

 50-lot order at $16.385 

 50-lot order at $16.395 

 50-lot order at $16.390.41 

93. Although Shak placed Spoof Orders at $16.395, he waited until the best bid was 

above that price level to place those Spoof Orders. 

94. At 3:22:03.367, shortly after Shak placed his first two Spoof Orders—and perhaps 

in response to the false signals of demand they conveyed—the bid-ask spread moved up to 

$16.400/$16.405, meaning that Shak’s Genuine Order was now at the best offer. At 3:22:51.442, 

another trader crossed the bid-ask spread (perhaps in response to the false signals of demand 

conveyed by Shak’s Spoof Orders) and filled Shak’s Genuine Order.42

95. Less than five seconds after the Genuine Order was filled, Shak began canceling 

his Spoof Orders.43 He started by canceling his Spoof Orders at $16.395 at 3:22:55.576, and 

cancelled the last Spoof Order at 3:22:57.819. Shak canceled all seven Spoof Orders in the span 

of approximately two and a half seconds, meaning that on average it took less than 400 

milliseconds to cancel each Spoof Order. Shak canceled the Spoof Orders in order by price, 

starting with the orders at the best bid that were at greatest risk of being hit, and ending with the 

order furthest from the bid-ask spread that was at the least risk of being hit. The fact that Shak 

prioritized canceling the Spoof Orders that were at greatest risk of being hit suggests that he did 

not want those orders to be filled, and to the contrary, placed all of the Spoof Orders with the 

intent to cancel them. 

 

41 Chart 6 at [G]. 

42 Chart 6 at [H]. 

43 Chart 6 at [I]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 45 of 54
46 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

96. In summary, while waiting for a fill on a three-lot Genuine Order to buy, Shak 

placed downward pressure on the price by placing six Spoof Orders to sell a total of 250 lots, 

which he intended to cancel, and which he did cancel without any lots being filled. Although 

Shak’s Spoof Orders to sell did not actually move the bid-ask spread—it remained at 

$16.400/$16.405 for most of the time those Spoof Orders were on the market—that is irrelevant. 

Shak placed the Spoof Orders with the intent to cancel them, with the intent to convey false 

signals of supply to the marketplace, and with the intent to apply downward price pressure in 

order to get a better price on his Genuine Orders. Indeed, approximately 500 milliseconds after 

Shak placed his first Spoof Order, the bid-ask spread moved up to $16.400/$16.405, and might 

have risen further if Shak had not placed additional Spoof Orders. In addition, the trader or 

traders that crossed the bid-ask spread to fill Shak’s Genuine Order to buy may have done so in 

response to the false signals of supply conveyed by Shak’s Spoof Orders. In other words, Shak’s 

spoofing on the sell side of the market may have allowed him to fill his Genuine Order to buy at a 

better price, more quickly, or in a larger quantity than he could have if he had not placed the 

Spoof Orders. 

97. A few minutes later, while waiting for a fill on a three-lot Genuine Order to sell, 

Shak placed upward pressure on the price by placing seven Spoof Orders to buy a total of 350 

lots, which he intended to cancel, and which he did cancel without any lots being filled. When 

Shak began placing his Spoof Orders to buy, the best price he could have filled his Genuine Order 

at was $16.395 (i.e. he would have to have sold lower than he wanted). As he began placing 

Spoof Orders to buy, the bid-ask spread moved up such that his Genuine Order could ultimately 

be fully filled when another trader or traders placed aggressive buy orders at $16.405. In other 

words, Shak’s spoofing on the buy side of the market allowed him to fill his Genuine Order to sell 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 46 of 54
47 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

at a better price, more quickly, or in a larger quantity than he could have if he had not placed the 

Spoof Orders. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 47 of 54
48 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Example 7: February 26, 2018 

Chart 7 (13:43:23.611− 13:44:29.223) 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 48 of 54

0 Placement 16.590 

* Modification 

181 Cancellation 

V Bought I:. Sold 16.585 

- SellSide - BuySide 16.580 

- Best Bid/Best Ask 

Bid-Ask Spread 16.575 

8 

·;: 

11-

16.570 

16.565 

16.560 

16.555 

[BJ Shak begins placing a seties of 

Spoof Orders to ell. Shak places 

___ seven Spoof Orders to sell a total of 

235 lots. 

[AJ Shak places an 

iceberg Genuine 

Order to buy 10 

lots with one lot 

visible at $16.560. 

13:43:30.0 

(1) 

50 

13:43 :40.0 

25 

50 

20 

13:43:50.0 

[DJ Less than 1.1 seconds after the Genuine Order is 

filled. Shak begins canceling his Spoof Orders. 

20 

20 

[CJ Shak modifies the Genuine Order to $16.565 and gets 

_ filled immediately. 

13:44:00.0 

Time 

13:44:10.0 13 :44:20.0 13:44:30.0 
49 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

98. At 1:43:33.731 PM on February 26, 2018, Shak placed an iceberg Genuine Order 

to buy 10 lots of the March 2018 Silver contract, with one lot visible to the market at a price of 

$16.560.44 At that point in time the bid-ask spread was at $16.560/$16.565, meaning Shak’s 

Genuine Order was at the best bid and would be filled if a trader or traders crossed the bid-ask 

spread and any other orders ahead of him in the queue at $16.560 were filled. In other words, it 

would benefit Shak if the market moved towards his Genuine Order, allowing him to buy at a 

lower price than was currently available. 

99. At 1:43:38.337, Shak began placing a series of Spoof Orders to sell the March 

2018 Silver contract. Between 1:43:38.337 and 1:44:17.560, Shak placed seven Spoof Orders to 

sell a total of 235 lots, in the following sequence: 

 50-lot order at $16.570 

 50-lot order at $16.575 

 50-lot order at $16.580 

 25-lot order at $16.585 

 20-lot order at $16.575 

 20-lot order at $16.585 

 20-lot order at $16.580.45

100. After placing these Spoof Orders, Shak modified his Genuine Order to a price of 

$16.565 at 1:44:21.442. Because the best offer at that point was $16.565, Shak’s Genuine Order 

became an aggressive order that crossed the bid-ask spread. Although Shak’s Genuine Order was 

an iceberg, because it was modified to become an aggressive order and because there were 

sufficient orders on the book at the best offer, Shak’s Genuine Order immediately filled 

completely at 1:44:21.442.46

 

44 Chart 7 at [A]. 

45 Chart 7 at [B]. 

46 Chart 7 at [C]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 49 of 54
50 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

101. Less than 1.1 seconds after the Genuine Order was filled, Shak began canceling his 

Spoof Orders.47 He started by canceling his Spoof Order at $16.570 at 13:44:22.511, and 

cancelled the last Spoof Order at 13:44:24.297. Shak canceled all seven Spoof Orders in less than 

two seconds, meaning that on average it took less than 300 milliseconds to cancel each Spoof 

Order. Shak canceled the Spoof Orders in order by price, starting with the orders at the best bid 

that were at greatest risk of being hit, and ending with the order furthest from the bid-ask spread 

that was at the least risk of being hit. The fact that Shak prioritized canceling the Spoof Orders 

that were at greatest risk of being hit suggests that he did not want those orders to be filled, and to 

the contrary, placed all of the Spoof Orders with the intent to cancel them. Moreover, the 

swiftness with which Shak canceled his Spoof Orders, and the order in which he did so, allowed 

him to avoid being filled on his Spoof Orders. Less than two seconds after he canceled his Spoof 

Order at $16.570, and before he finished canceling the rest of his Spoof Orders, the best offer rose 

to $16.570, meaning that his Spoof Order at that price would have been at increased risk of being 

hit if he had not canceled it so quickly. 

102. In summary, while waiting for a fill on a ten-lot iceberg Genuine Order to buy, 

Shak placed downward pressure on the price by placing seven Spoof Orders to sell a total of 235 

lots, which he intended to cancel, and which he did cancel without any lots being filled. Although 

Shak’s Spoof Orders did not actually move the bid-ask spread—it remained at $16.560/$16.565 

from the time he began placing his Spoof Orders until he filled his Genuine Orders aggressively 

at $16.565—that is irrelevant. Shak placed the Spoof Orders with the intent to cancel them, with 

the intent to convey false signals of supply to the marketplace, and with the intent to apply 

downward price pressure in order to get a better price on his Genuine Orders. Indeed, the bid-ask 

 

47 Chart 7 at [D]. 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 50 of 54
51 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

spread rose to $16.565/$16.570 immediately after Shak removed the downward price pressure by 

canceling his Spoof Orders. In other words, Shak’s spoofing may have allowed him to fill his 

Genuine Orders at a better price or more quickly than he could have if he had not placed the 

Spoof Orders. 

VIII. VIOLATIONS OF THE ACT 

COUNT I 

VIOLATIONS OF 7 U.S.C. § 6c(A)(5)(C) 

Spoofing 

103. Paragraphs 1 to 102 are re-alleged and incorporated herein by reference. 

104. By reason of the conduct described above, Shak engaged in trading, practices, or 

conduct on or subject to the rules of a registered entity that is, is of the character of, or is 

commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the bid 

or offer before execution). 

105. In placing each Spoof Order, Shak acted with the intent to cancel the bid or offer 

before execution. 

106. By reason of the foregoing, Shak violated 7 U.S.C. § 6c(a)(5). 

107. Each Spoof Order constitutes a separate and distinct violation of 7 U.S.C. 

§ 6c(a)(5)(C). 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 51 of 54
52 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

COUNT II 

VIOLATIONS OF 7 U.S.C. § 9(1), 

AND 17 C.F.R. § 180.1(A)(1), (3) 

Use of a Manipulative and Deceptive Device, Scheme, or Artifice 

108. Paragraphs 1 to 102 are re-alleged and incorporated herein by reference. 

109. By reason of the conduct described above, Shak, in connection with a contract for 

future delivery on a registered entity, intentionally or recklessly: (1) used or employed, or 

attempted to use or employ, manipulative devices, schemes, or artifices to defraud; or 

(2) engaged, or attempted to engage, in acts, practices, or courses of business, which operated or 

would have operated as a fraud or deceit upon market participants. 

110. In the conduct described above, Shak acted intentionally or recklessly. 

111. By reason of the foregoing, Shak violated 7 U.S.C. § 9(1) and 17 C.F.R. 

§ 180.1(a)(1) and (3). 

112. Each Spoof Order, including but not limited to those specifically alleged herein, 

constitutes a separate and distinct violation of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1) and (3). 

IX. RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that the Court, as authorized by 

7 U.S.C. § 13a-1, and pursuant to its own equitable powers: 

A. Find that Shak violated 7 U.S.C. §§ 6c(a)(5)(C), 9(1), and 17 C.F.R. 

§ 180.1(a)(1), (3) (2021); 

B. Enter an order of permanent injunction enjoining Shak, and his affiliates, agents, 

servants, employees, successors, assigns, attorneys, and all persons in active concert with him 

who receive actual notice of such order by personal service or otherwise, from violating 7 U.S.C. 

§§ 6c(a)(5)(C), 9(1) and 17 C.F.R. § 180.1(a)(1) and (3); 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 52 of 54
53 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

C. Enter an order of permanent injunction enjoining Shak, and his affiliates, agents, 

servants, employees, successors, assigns, attorneys, and all persons in active concert with him, 

from directly or indirectly: 

1. Trading on or subject to the rules of any registered entity (as that term is 

defined in 7 U.S.C. § 1a(40)); 

2. Entering into any transactions involving “commodity interests” (as that term is 

defined in 17 C.F.R. § 1.3 (2021)) for their own personal account or for any 

account in which they have a direct or indirect interest; 

3. Having any commodity interests traded on their behalf; 

4. Controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account involving 

commodity interests; 

5. Soliciting, receiving or accepting any funds from any person for the purpose 

of purchasing or selling any commodity interests; 

6. Applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except as 

provided for in 17 C.F.R. § 4.14(a)(9) (2021); and 

7. Acting as a principal (as that term is defined in 17 C.F.R. § 3.1(a) (2021)), 

agent or any other officer or employee of any person (as that term is defined 

in 7 U.S.C. § 1a(38)), registered, exempted from registration or required to be 

registered with the Commission except as provided for in 17 C.F.R. 

§ 4.14(a)(9) (2021). 

D. Enter an order directing Shak, as well as any third-party transferee and/or 

successors thereof, to disgorge, pursuant to such procedure as the Court may order, all benefits 

received including, but not limited to, salaries, commissions, loans, fees, revenues, and trading 

profits derived, directly or indirectly, from acts or practices which constitute violations of the Act 

and Regulations as described herein, including pre-judgment and post-judgment interest; 

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 53 of 54
54 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

E. Enter an order requiring Shak to make full restitution to every person who has

sustained losses proximately caused by the violations described herein, including pre-judgment 

and post-judgment interest; 

F. Enter an order directing Shak to pay civil monetary penalties to be assessed by the

Court, in an amount not to exceed the penalty prescribed by 7 U.S.C. § 13a-1(d)(1), as adjusted 

for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act 

of 2015, Pub. L. 114-74, 129 Stat. 584 (2015), title VII, Section 701, see Regulation 143.8, 17 

C.F.R. § 143.8 (2021), for each violation of the Act and Regulations, as described herein;

G. Enter an order requiring Shak to pay costs and fees, as permitted by 28 U.S.C.

§§ 1920 and 2412(a)(2); and

H. Enter an order providing for such other and further relief as this Court may deem

necessary and appropriate under the circumstances. 

Respectfully submitted, 

Date: August 5, 2022 ATTORNEYS FOR PLAINTIFF 

___________________________ 

James H. Holl, III (202) 418-5311 

jholl@cftc.gov 

Chief Trial Attorney 

Brian Hunt (202) 418-5095 

bhunt@cftc.gov 

Trial Attorney 

Commodity Futures Trading Commission

Case 2:22-cv-01258 Document 1 Filed 08/05/22 Page 54 of 54

~