PIO ‘flash crash’ trader may be extradited to US, rules UK court
Navinder Singh Sarao, a 37-year-old Indian-origin futures trader could be extradited to the US to face trial for his role in the May 2010 “flash crash” which wiped billions of dollars off the value of US shares in minutes, a UK court ruled on Wednesday.
A district judge ruled at Westminster Magistrates’ Court that Sarao’s alleged actions constituted a crime in the UK. Sarao could be handed over to the US authorities to stand trial there, the judge said. The ruling means Sarao can be sent to the US to answer 22 counts of wire fraud, commodities fraud and market manipulation carrying a maximum sentence of 380 years’ imprisonment.
Sarao was arrested by British authorities on April 21 here at the request of the US Department of Justice which wants to extradite him on charges of wire fraud, commodities fraud and market manipulation.
Sarao is accused of contributing to events on May 6, 2010, when the Dow Jones index briefly fell nearly 1,000 points, temporarily wiping nearly $1 trillion off shares. The 36-minute-long crash was its biggest ever intraday slump. The US Department of Justice said Sarao’s activity “contributed to the market imbalance on that day” and he is accused of making a $900,000 profit that day, and $40 million over four years by employing similar tactics.
They have frozen $30 million of his assets and want him to stand trial in the US. He is accused of minting millions of dollars with a computer programme that could automatically manipulate prices.
Sarao, who is wanted in the US on 22 criminal counts, traded on the Chicago Mercantile Exchange from his parents’ home near Heathrow Airport. Sarao attended the brief hearing dressed in a red jumper and black trousers and was released on bail afterwards. He denies any wrongdoing and intends to appeal against the ruling, which must in any case be approved by British Home Secretary Theresa May before the extradition can take place, the BBC reported.
May has two months in which to decide, after which the appeal can be heard. US regulators have also filed civil claims against Sarao, adding that he made $40 million over five years. Sarao was charged in a federal criminal complaint in the Northern District of Illinois in February 2015.
US authorities allege he is guilty of “spoofing” - the practice of placing large orders that manipulate the markets and then cancelling or changing them, allowing him to buy or sell at a profit.
Sarao’s spoofing netted him a profit of $40 million (28 million pounds), they argue. Sarao’s legal team have argued that he cannot be extradited because nothing he did constituted a crime in the UK.
His lawyer, Richard Egen, told journalists outside the courtroom: “We still think we have a strong argument and we will be appealing the decision once the Secretary of State makes her decision. “We are very disappointed. We think we had a strong argument, but we will be going to the Court of Appeal to make our argument there.”