View the article online at http://citywire.co.uk/money/article/a893859
UK ‘flash crash’ trader loses US extradition appeal
Navinder Singh Sarao faces 22 counts of fraud and commodity manipulation in the US after being accused of triggering a 1,000 point crash in the Dow Jones index in 2010.
The British bedroom trader accused of bringing Wall Street to its knees has lost his battle against extradition to the US.
Navinder Singh Sarao, a British futures trader, was accused of market manipulation triggering a 1,000 point fall in the Dow Jones on 6 May 2010, wiping almost $1 trillion off the value of the market.
It is claimed Sarao, nicknamed the ‘Hound of Hounslow’, made around £30 million in five years using an ‘automated trading program’ from a computer in his bedroom to manipulate prices.
At a ruling at Westminster Magistrates Court, a UK judge approved the extradition of 37-year old Sarao to the US to face 22 counts of fraud and commodity manipulation. If convicted the charges carry a maximum jail term of 380 years.
His lawyers claimed Sarao was innocent and said they would appeal following a final decision on his extradition from home secretary Theresa May.
Andrew Katzen, a partner at law firm Hickam & Rose, believes Sarao’s case highlights some major issues in the financial system.
‘Sarao’s ordeal has highlighted deep flaws within the regulation of the financial markets, principal among which is the inability of regulators and lawmakers to keep up with the breakneck pace of technology.’
Katzane point out a law against spoofing [disruptive algorithmic trading] only came into force in the US in 2010, the first use of which occurred only in November of last year, while in the UK the practice remains a purely regulatory issue.
‘This goes some way to explaining why the usually hawkish US authorities were so slow to act. It took them five years to bring any kind of formal sanction against Sarao, who was happily trading up until as recently as 2014. Small wonder that he is widely thought to be scapegoat.’
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by David Kempton on May 24, 2016 at 17:15