A futures trader from Hounslow has been charged with illegally manipulating the stock market, allegedly contributing to the May 2010 market ‘flash crash’.
Navinder Singh Sarao, 36, is facing extradition after being charged with US wire fraud and commodities fraud and manipulation, in connection with his alleged role in the May 2010 'flash crash', when the Dow Jones Industrial Average plunged 600 points in five minutes.
Mr Sarao was arrested at his home in Hounslow on Tuesday (April 21), by the Met Police's extradition unit on behalf of the US authorities in connection with the alleged fraud, a police spokesman confirmed.
The charges and extradition request were announced by Assistant Attorney General Leslie R Caldwell of the US Justice Department’s Criminal Division and Special Agent in Charge Robert J Holley of the FBI’s Chicago Division.
A statement issued by the US Department of Justice said Mr Sarao was charged in a federal criminal complaint in the Northern District of Illinois on February 11 with 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.
The Justice Department also said "Mr Sarao's alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010".
The statement continued: "By allegedly placing multiple, simultaneous, large-volume sell orders at different price points - a technique known as 'layering' - Mr 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.
He will appear at Westminster Magistrates' Court on Wednesday (April 22).
