A lawyer for the US government seeking to extradite a British trader to stand trial has claimed that he made a profit of nearly $900,000 (£615,000) by manipulating the stock market to cause the “flash crash” on Wall Street in 2010.
At the start of a two-day extradition hearing in London on Thursday, Mark Summers said the US government was seeking to prosecute Navinder Singh Sarao on 22 criminal counts, including wire fraud, commodities fraud and attempted price manipulation.
The US government alleges that Sarao’s behaviour helped cause the sharp fall in equity prices on 6 May 2010.
Summers, prosecuting, said: “The [US] government says the defendant placed sell orders for stocks but never intended to sell. Sales were cancelled without ever being executed, but the market believed there was a liquid market for stocks he was advertising for sale.”
Sarao had made millions from other, mainly US traders, through driving prices down and then buying at a cheaper level, in a practice known as spoofing, he alleged. “The defendant on this day was heavily engaged in his spoofing activities, which contributed to the market imbalance.”
The US justice department claims that Sarao and his company, Nav Sarao Futures Limited, made $878,000 profit from the flash crash and a total of £26m illegally over five years.
The Hounslow-based former bank worker and Brunel University student, who is fighting extradition to the US, faces charges that carry sentences totalling a maximum of 380 years. He denies all the charges.
Sarao, who was sitting in a side room to the court behind glass, was smartly dressed in a brown suit and brown leather shoes. He had his head down for much of the hearing.
Lawyers for the US government told a hearing in September that Sarao also faces new allegations relating to emails he sent.
Summers read some of these out. One email Sarao is alleged to have sent to somebody helping him with his computer software said: “I really do not know how long I can wait. Every day I am getting hit on my spoofs.”
District judge Quentin Purdy initially set a £5m surety as part of Sarao’s bail conditions, which the trader claimed that he was unable to pay. He was released on conditional bail in August after providing a £50,000 surety.
The extradition hearing at Westminster magistrates court continues.
This article was written by David Hellier, for theguardian.com on Thursday 4th February 2016 13.49 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010