UK trader held over US shares crash


Published: Tuesday 21st April 2015 by The News Editor

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A futures trader was arrested in Britain today in connection with the “Flash Crash” in the United States five years ago when the Dow Jones Industrial Average plunged 600 points in five minutes.

The US Justice Department said Navinder Singh Sarao, 37, of Hounslow, west London, had been held and the US was requesting his extradition.

He has been charged in a federal criminal complaint in the Northern District of Illinois with one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of “spoofing”, a practice of bidding or offering with the intent to cancel the bid or offer before execution, the Department said in a statement.

He is accused of using an “automated trading programme” to manipulate the market for E-Mini S&P 500 futures contracts (E-Minis) on the Chicago Mercantile Exchange (CME). E-Minis are stock market index futures contracts based on the Standard & Poor’s 500 Index.

His alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6 2010 that came to be known as the “Flash Crash”, when the Dow Jones Industrial Average fell by about 600 points in five minutes, following a drop in the price of E-Minis, the statement said.

According to the complaint, Sarao allegedly placed multiple orders, then cancelled them without executing them, leading prices to fall.

The statement said: “When prices fell as a result of this activity, Sarao allegedly sold futures contracts, only to buy them back at a lower price. Conversely, when the market moved back upward as the market activity ceased, Sarao allegedly bought contracts, only to sell them at a higher price.”

Published: Tuesday 21st April 2015 by The News Editor

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