Flash crash perpetrator gets US indictment


4 September, AtoZForex.com, Lagos – Navinder Sarao, the London day trader charged for contributing to the 2010 “flash crash,” has now been formally indicted by a U.S. federal grand jury on charges of market manipulation. According to court filing made public on Thursday, September 2, he has been found guilty of contributing largely to the flash crash. He is also facing parallel civil charges by the U.S. Commodity Futures Trading Commission.

Back in August, Sarao was freed on bail from a British jail, following his grant in April after his arrest. He could not make the payment due to asset freeze from US regulators. Sarao’s activities are believed to be such that he manipulated markets, using an automated trading program to “spoof” markets by generating large sell orders that pushed down prices. Subsequently buying such markets after the dip at artificially lower prices.

Criminal charges

The indictment contained criminal charges which include wire fraud, commodities fraud, commodity price manipulation and attempted price manipulation. Further more, it was discovered that Sarao sought out the assistance of computer programmers to design a manipulative automated trading program as discovered by emails sent to programmers where he outrighly described spoofing behavior.

In a February 2009 email, for instance, the indictment says Sarao told a programmer: “If I am short I want to spoof it (the market) down, so I will place offer orders … at the 1st offer and 2nd offer and an order … into the 1st bid. These will not be seen.”

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