(CHICAGO) A futures trader whose alleged market manipulation led to the 2010 U.S. stock market drop known as the “Flash Crash” is finally set to appear in a Chicago courtroom Tuesday, authorities say.
Navinder Singh Sarao, 37, of Hounslow, United Kingdom, was arrested in London in April 2015, the Chicago Sun-Times is reporting. The feds say Sarao made a significant profit while contributing to the May 6, 2010, crash, which sent the Dow Jones Industrial Average plummeting 600 points in five minutes.
A February 2015 criminal complaint in Chicago charged Sarao with wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation and one count of “spoofing.”
The U.K. Secretary of State ordered Sarao’s extradition to the United States in May, but he tried to appeal to the U.K. High Court, records show. The court shot him down Oct. 14, and his extradition was to occur by Nov. 11, according to court filings.
Now, Sarao’s arraignment has been set for Tuesday morning in the courtroom of U.S. District Judge Virginia Kendall. New York attorney Roger Burlingame filed his appearance on Sarao’s behalf Monday but did not respond to messages seeking comment. Sarao was taken into U.S. custody Monday afternoon.
The feds say Sarao used an automated trading program to manipulate the E-Mini S&P 500 futures contracts market on the Chicago Mercantile Exchange. Prosecutors said he used a “dynamic layering” scheme to affect the price of E-Minis — allegedly placing multiple, simultaneous, large-volume sell orders at different price points and creating the appearance of substantial supply in the market.
Sarao allegedly modified the orders frequently, so they remained close to the market price and typically canceled orders without executing them. When prices fell as a result, Sarao allegedly sold futures contracts only to buy them back at a lower price. When the market later moved upward again, Sarao allegedly bought contracts only to sell them at higher prices.
