Poker player accused of violating commodities trading ban

Last fall, Las Vegas poker player and investor Daniel Shak was hit with a $400,000 penalty and trading ban after he was accused of attempting to manipulate oil markets.

But, regulators claim, he didn’t learn his lesson.

The U.S. Commodity Futures Trading Commission is accusing Shak — who once sued his ex-wife over her $1 million shoe collection — of violating a two-year trading ban six months after consenting to it.

Shak bought two gold-futures contracts one day this past spring in the final minute of the day's trading, just as prices were being determined, “the exact type of commodity futures trading that he agreed to be banned from,” the agency said in a news release.

The commission, which regulates trading of oil, gold and other commodities, filed a civil enforcement complaint against Shak today in U.S. District Court for the District of Columbia.

Shak’s two-year ban took effect last November — along with a permanent ban on crude-oil trading and the $400,000 penalty — after he tried to manipulate the price of oil futures contracts in 2008, according to the commission.

Shak neither admitted nor denied the allegations.

Then, on May 22 of this year, Shak bought the gold-futures contracts, the agency said.

He failed to report his violation to the commission or to a merchant who handles buy and sell orders, the agency alleged. Shak or someone acting on his behalf only admitted the trades after being confronted by the merchant, the commission said.

The merchant reported Shak’s trades to the commission, according to court documents.

The agency is seeking court approval for a permanent injunction barring Shak from various commodities trading. It also wants to slap him with one of two financial penalties: up to $140,000 for each violation of the Commodity Exchange Act or triple his monetary gain from each violation.

David Kovel, an attorney for Shak, said the commission is having a "disproportionate reaction to a good-faith error."

Shak made his trades 46 seconds before the market closed, or 14 seconds late to avoid violating the ban, Kovel said. Shak has two employees who normally work to ensure his trades do not breach the ban, Kovel said, but it was the Thursday before Memorial Day, "his team was not there, and he made a mistake."

"Next thing we know, he's being sued and being treated like a criminal for what amounts to a foot fault," Kovel said.

Shak has booked $7.2 million in poker earnings, ranking him 43rd on the U.S. all-time money list, according to poker database the Hendon Mob.

He has earned $678,295 at the World Series of Poker but never won a tournament.

In June 2012, Shak sued his ex-wife, Beth, for 35 percent of her $1 million shoe collection. Shak claimed that she hid 1,200 pairs of designer heels in a “secret room” at their home in New York as they negotiated a $3.25 million divorce settlement, according to news reports.

He dropped the case the next month.

Business

Staff writer Case Keefer contributed to this report.

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