Many on Wall Street think that arrest of the little known UK based trader Navinder Singh Sarao is simply ridiculous. To add insult to injury 2 more traders have been arrested for using similar market spoofing tactics. This time the 2 traders are based in UAE.
Everyone on Wall Street has been talking about this week’s arrest of a little-known UK-based trader on allegations that he caused the May 6, 2010 “Flash Crash.”
The flash crash had occurred in 2010. After a passage of 5 years a little known UK based trader is being accused of causing the flash crash in which Dow Jones Index fell something like 1000 points in a few minutes and then recovered.
Mr. Navinder Singh Sarao is in custody. He has been given another week to raise £5.05m in bail which is a huge amount. He failed to make bail last week.
The DoJ said last week that “Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010”.
Its statement continued: “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.”
Mr Sarao was then able to buy and sell futures contracts tied to the value of the share indexes, it is alleged.
Now many are asking is he the real Wolf of Wall Street.
You can almost hear the scriptwriters cracking their knuckles over their keyboards. The prospective film even has a catchy title. You’ve watched The Wolf of Wall Street, now meet The Hound of Hounslow. Want something pithier? How about Flash Crash?
This story has everything, except (as far as we know) a love interest. A lone trader has been accused of illegally earning millions of pounds and bringing chaos to the world’s financial markets from a computer in his parents’ semi-detached home in Hounslow.
So expect a new Wolf of Wall Street type movie soon. Meanwhile Navinder Singh Sarao claims that he did nothing wrong. He was just good at his job.