Navinder Singh Sarao (36), Hounslow has been accused of using a computerised share-trading program to manipulate the market for S&P 500 futures contracts on the Chicago Mercantile Exchange. He has been accused of reaping profits of $40 Million (£26 million). It is alleged that Sarao created several fake instructions to buy and sell investments, using a customised computer programme.
The US Department of Justice is seeking to extradite this day-trader to stand trial on charges that he brought the US stock market briefly to its knees on 6 May 2010.
Sarao has also been termed as the mastermind behind the 2010 Wall Street “Flash Clash”, in which almost a trillion dollars was wiped from global share prices. However, the whereabouts of his supposed £26 million profit remains unknown.
It is also alleged that he had made £550,000 in five minutes on the day of the crash in May 2010, when £570 billion ($850 billion) was erased from the value of the world's biggest companies. It was the biggest one-day catastrophe in Wall Street history and sent New York traders into a turmoil.
He was arrested by Scotland Yard's extradition at the request of the FBI. They claimed that Sarao had set up an offshore company, “Nav Sarao Milking Markets” in the Carribean. It is also alleged that Sarao arrogantly told financial officials to “kiss my a***”.
Sarao appeared at Westminister Magistrates' court to fight an attempt to extradite him to the US. He informed the court that he did not consent with the extradition order.
The court was also informed that Sarao was born and raised in the UK. He is a graduate of Brunel University, West London and he worked in the banking sector before becoming a day trader, a business which was based in the semi-detached home of his parents, in Hounslow.
From the allegations and charges, Sarao could face a maximum sentence of 380 years at a prison in America.
He was granted bail in the sum of £5.05 million. However, the Aaron Watkins, who was prosecuting on behalf of the Justice Authority of the United States of America had asked the court to refuse Sarao to be bailed, stating that the graveness of the charges against him may consequently make him resist arrest.
What seems to astound many is the humble lifestyle that Sarao has. One would find it difficult to comprehend that someone who has made profits worth of millions would still be living at modest home of their parents, living a very ordinary life (or so it seems). It is at his parents' home where he registered his company, Nav Sarao Futures. It is believed that he operated from his bedroom.
Defending Sarao, Joel Smith said, “This matter has come as something of a bolt from the blue for Mr Sarao.”
The US government were against Sarao being released on bailed, fearing that he would fled. However, Smith described him as a man of “impeccable” character with no past criminal convictions, who lived with his parents.
Out of the £5.05 million bail, £30,000 was offered by Sarao's retired father, while £10,000 each from his two brothers. The remaining £5 million came from one of the trading accounts belonging to Sarao. However, the court heard that £4.7 million of this was a loan.