Flash crash trader to face court again
A UK financial trader accused of contributing to the 2010 Wall Street “flash crash” is due to appear in court again on Wednesday.
Navinder Singh Sarao, who first appeared at Westminster Magistrates’ Court last Wednesday when he said he opposed extradition to the US, must pay £5.05m bail to secure his release.
“If they haven’t paid they come back every week. He’s not paid as yet,” a court official said.
Mr Sarao was arrested last week.
To secure the bail Mr Sarao must pay £5m and his parents must pay £50,000.
The conditions of bail also state that he must stay at his parents’ address in Hounslow, west London, each night, and cannot travel internationally or use the internet.
Mr Sarao has been charged by the US Department of Justice with wire fraud, commodities fraud and market manipulation.
The DoJ claims that Mr Sarao and his firm, Nav Sarao Futures, made £26m ($40m) illegally over five years.
He has been accused of using an “automated trading program” to manipulate markets, and contributing to the flash crash of 6 May 2010. On that day the Dow Jones index lost 700 points in a matter of minutes – wiping about $800bn off the value off US shares – before recovering just as quickly.
‘Significant profits’
Regulators blamed high-frequency traders placing multiple sell orders for the crash.
High-speed trading is where share dealers use computer algorithms to buy and sell stocks in milliseconds.
The DoJ said last week that “Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010”.
Its statement continued: “By allegedly placing multiple, simultaneous, large-volume sell orders at different price points – a technique known as ‘layering’ – Sarao created the appearance of substantial supply in the market.”
Mr Sarao was then able to buy and sell futures contracts tied to the value of the share indexes, it is alleged.
Source: bbc – Flash crash trader to face court again
