Navinder Singh Sarao, Stock Market Manipulation, Illinois 2010

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Table of Contents

Trader Charged in 2010 Flash Crash

Navinder Singh Sarao, a 36-year-old futures trader from Hounslow, United Kingdom, was arrested in the United Kingdom today on U.S. wire fraud and commodities fraud and manipulation charges in connection with his alleged role in the May 2010 “Flash Crash,” when the Dow Jones Industrial Average plunged 600 points in five minutes.

The charges against Sarao include one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of “spoofing,” a practice of bidding or offering with the intent to cancel the bid or offer before execution.

According to allegations in the complaint, which was unsealed today, Sarao allegedly used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts (E-Minis) on the Chicago Mercantile Exchange (CME). E-Minis are stock market index futures contracts based on the Standard & Poor’s 500 Index.

Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the U.S. stock market on May 6, 2010, that came to be known as the “Flash Crash.” On that date, the Dow Jones Industrial Average fell by approximately 600 points in a five-minute span, following a drop in the price of E-Minis.

The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Sarao is currently awaiting extradition to the United States. The case is being investigated by the FBI’s Chicago Division and is being prosecuted by Assistant Chief Brent S. Wible and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section, with assistance provided by the U.S. Attorney’s Office for the Northern District of Illinois.

The U.S. is requesting Sarao’s extradition from the United Kingdom, where he was arrested today. If convicted, Sarao faces up to 20 years in prison for the wire fraud count and up to 10 years in prison for each count of commodities fraud and manipulation.

This case highlights the importance of protecting the integrity of our financial markets and holding accountable those who engage in manipulative and fraudulent practices.