Tuesday, April 21, 2015

Sarao....

Nanex chart showing trading during the Google flash crash

The Federal Bureau of Investigation said Navinder Singh Sarao, 37, was arrested Tuesday in the U.K. and charged with multiple counts of fraud.

Prosecutors say Sarao used illegal trading techniques that contributed to an abrupt stock market crash on May 6, 2010, when the Dow Jones industrial average fell 600 points in a matter of minutes before bouncing back.
The episode raised concerns about the underlying structure of the stock market and highlighted the dangers of so-called computer generated high-frequency trading.

According to the criminal complaint, Sarao flooded the market with multiple, large sell orders for futures contracts called E-Minis, which traders use to speculate on the direction of the S&P 500 index.

This created the appearance of heavy supply in the market and drove prices down. Sarao allegedly canceled most of the orders before they were executed.

He profited when the market fell and also when it rebounded by buying and selling futures contracts. On the day of the Flash Crash, the complaint says Sarao made nearly $9 million trading E-Minis. From 2010 to 2014, he allegedly made about $40 million.

He didn't pay the bond.. so the scam continue and so is jail.

Just a thought.

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