An Indian-origin futures trader, fighting extradition to America for his alleged role in the 2010 Wall Street “flash crash” which wiped nearly USD 1 trillion off the value of US shares, told a British court today that he was innocent and just good at his job. Navinder Singh Sarao, 36, has been charged with wire fraud, commodities fraud and market manipulation by the US Justice Department.
Sarao faces extradition to the US and was remanded in custody for the third time by a UK court today after failing to raise 5.05 million pounds in bail. His legal team’s request that bail be lowered to 50,000 pounds was refused. They told Westminster Magistrates’ Court he had been unable to raise the funds required by US authorities because they had frozen his assets.
Wearing a grey sweatshirt and tracksuit bottoms, he sat calmly in the dock until he heard his bail conditions would not be changed. He then spoke out to plead his innocence, claiming he had not “done anything wrong apart from being good at my job”. “How is this allowed to go on, man,” he questioned. Sarao’s legal team will now consider an appeal in the UK High Court.
Two weeks ago, he was granted bail pending a full extradition hearing later this year provided he produced 5.05 million pounds and met other bail conditions, including that he must stay at his parents’ address in Hounslow, west London, each night and cannot travel internationally or use the internet. A review date of the case remains as May 26, but the date for a full extradition hearing has been pushed back from August to September 24-25.
It is alleged that he used a high-speed internet connection at his parent’s home to place a large number of fraudulent electronic orders to sell one type of financial contract. He is then accused of cancelling the orders, forcing the prices back up again and taking profit from the price swing. The US Justice Department believes that these trades contributed to the flash crash of May 6, 2010, when the Dow Jones stock exchange lost 700 points in a matter of minutes, wiping USD 800 billion of the value of US shares, before recovering again.
US regulators have blamed high-frequency traders placing multiple sell orders for the crash. High-speed trading is where share dealers use computer algorithms to buy and sell stocks in milliseconds. “By allegedly placing multiple, simultaneous, large-volume sell orders at different price points – a technique known as ‘layering’ — Sarao created the appearance of substantial supply in the market,” a Justice Department statement said.
It is alleged Sarao was then able to buy and sell futures contracts tied to the value of the share indexes.