2015年4月22日星期三

London trader 'helped trigger £500bn 2010 Flash Crash from his semi'

  • Navinder Singh Sarao, 37, is accused of manipulating the stock market 
  • US prosecutors want to extradite the father-of-two to face trial in New York
  • He is accused of making £27 million using computers to 'spoof' the market 
  • Mr Sarao is due to appear before Westminster Magistrates' Court tomorrow

A British trader helped trigger a £500billion stock market crash by manipulating financial markets from his semi-detached house in London, US prosecutors claim.

Navinder Singh Sarao, 37, is alleged to have caused the May 2010 ‘flash crash’ which wiped billions off the value of US stocks and caused indexes to plummet on Wall Street.

He is accused of making £27million by using computer programmes to create fake transactions on an exchange run by Chicago-based CME Group Inc – all from his home in Hounslow, West London. It is opposite his parents’ suburban semi, where his company Nav Sarao Futures was registered. 

Navinder Singh Sarao is accused of making £27 million by 'spoofing' the stock market from his home, pictured

Navinder Singh Sarao is accused of making £27 million by 'spoofing' the stock market from his home, pictured

US prosecutors believe Mr Sarao used special computer software to manipulate the market on Wall Street 

US prosecutors believe Mr Sarao used special computer software to manipulate the market on Wall Street 

His activities went unnoticed by US investors and regulators, who spent months investigating the mystery crash and eventually blamed a jittery market.

But Mr Sarao is now alleged by prosecutors to have played a major role in the plunge by using tactics known as ‘layering’ and ‘spoofing’ on the day of the May 2010 crash.

These strategies involve creating market orders with no intention of following through on them, the aim of which is to push prices in a direction favourable to a trader’s strategy.

Mr Sarao almost always cancelled his orders, but they wreaked chaos on Wall Street. A report released almost five months after the incident had blamed a jittery market during the European debt crisis. 

But yesterday, officials from US Commodity Futures Trading Commission told reporters the British man was ‘a significant factor in market imbalance’, and that Mr Sarao’s illegal activities cover a period of five years between June 2009 and April 2014.

Aitan Goelman, director of enforcement at the US Commodity Futures Trading Commission, said Mr Sarao was ‘extremely active’ in the market ahead of and during the flash crash, which occurred on 6 May 2010. ‘His conduct was at least significantly responsible for the order imbalance that in turn was one of the conditions that led to the flash crash,’ Mr Goelman said.

He was arrested at his parent’s £480,000 home yesterday by officers from the Metropolitan Police at the request of the FBI.

He is now facing extradition and has been charged with one count of wire fraud, ten counts of commodities fraud, ten counts of commodities manipulation, and one count of ‘spoofing’. 

Navinder Singh Sarao, 37, is expected to appear at Westminster Magistrates' Court tomorrow 

Navinder Singh Sarao, 37, is expected to appear at Westminster Magistrates' Court tomorrow 

Yesterday, it emerged that the 37-year-old told CME Group Inc to ‘kiss my ass’ when they contacted him on the day of the ‘flash crash’ to remind him that all orders must be ‘bona fide transactions’.

Neighbours of Mr Sarao yesterday said he was married with two children. One neighbour said: ‘They are a quiet family, they say hello and goodbye, but that’s about it. The parents both work and their son lives opposite with his wife and two daughters. No-one has ever suggested they are wealthy.’

His parents, Nachattar Singh Sarao and Darshaw Kaur Sarao, bought their house in 1982.

Scotland Yard said Mr Sarao, was arrested by officers from the Metropolitan Police Service’s extradition unit. He will appear in custody at Westminster Magistrates’ Court tomorrow. 

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