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UK Man Arrested for Manipulating A Stock Market That Was Corrupt To Begin With

Navinder Singh Sarao

Navinder Sarao was likely only guilty of beating Wall Street's criminals at their own game.—Ronald David Jackson

U.K. Man Arrested on Charges Tied to May 2010 ‘Flash Crash’

Photo by David Shankbone.
ByAruna Viswanatha, Bradley Hope
A U.K. man was arrested Tuesday on charges that he contributed to the May 2010 “flash crash” during which the Dow Jones Industrial Average plunged 600 points within minutes in a single trading session, the U.S. Justice Department said.

Navinder Sarao is in the custody of U.K. authorities and faces charges of fraud, manipulation and a high speed trading practice known as “spoofing,” the agency said.

Mr. Sarao also faces charges from the U.S. Commodity Futures Trading Commission, which claims he played an integral role in contributing to the flash crash on May 6, 2010.

The CFTC said the spoofing techniques involved placing and quickly cancelling large orders “with no intention of the orders resulting in transactions.”

Navinder Sarao operated from his residence in the U.K. and traded through his own company, Nav Sarao Futures Ltd.

The CFTC, in its complaint, said Mr. Sarao over a period of five years “engaged in a massive effort to manipulate” the price of a stock market index futures contract—E-mini S&P—“by utilizing a variety of exceptionally large, aggressive and persistent spoofing tactics.”

The CFTC said the conduct continued until as recently as April 6, 2015.

The Justice Department complaint said Mr. Sarao, on the day of the flash crash, engaged in conduct that contributed to “an extreme order book imbalance” in the E-mini S&P market. Mr. Sarao placed orders representing approximately $170 million to more than $200 million of “persistent downward pressure” on the price. That imbalance contributed to market conditions that caused the E-mini S&P priced to fall 361 basis points, the complaint said.

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