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Accused British 'Flash Crash' Stock Trader To Be Extradited To The US (zerohedge.com)
Slashdot reader whoever57 writes: Navinder Sarao has lost his appeal and is set to be extradited to the USA, where he faces charges with a possible maximum sentence of 380 years. He is accused of causing the "flash crash" in 2010, when the Dow Jones index dropped by 1000 points.
He ran his trading from his bedroom in his parents' house and it is claimed that he made more than 30 million pounds (approximately $40 million) in five years. His parents had no idea what he was doing, nor the scale of his income. He is accused of placing trades that he never intended to fill, so, to this naive person, it's hard to distinguish what he did from the large high-speed trading firms.
"Lawyers for Mr Sarao tried to argue that the U.S. crime of spoofing had no equivalent under English law, meaning he could not be sent for trial overseas," reports The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail.
He ran his trading from his bedroom in his parents' house and it is claimed that he made more than 30 million pounds (approximately $40 million) in five years. His parents had no idea what he was doing, nor the scale of his income. He is accused of placing trades that he never intended to fill, so, to this naive person, it's hard to distinguish what he did from the large high-speed trading firms.
"Lawyers for Mr Sarao tried to argue that the U.S. crime of spoofing had no equivalent under English law, meaning he could not be sent for trial overseas," reports The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail.
Wrong, "English law" refers to the legal system of common law in England and Wales (and that is known as English Law) - Scotland has its own legal system (Scots Law), as does Northern Ireland.
Neither the United Kingdom nor Britain has a single legal system.
The quote is perfectly accurate.
C'mon Musk, get that Mars train running so all you fuckwit Yanks can fuck off and leave the rest of us alone.
Although I agree that generally the U.S. does tend to throw its weight around a little too much over the world, this case isn't a good example. The accused here was trading on U.S. markets. He may have been physically located in the U.K. at the time, but his actions took place in the U.S. It is fully appropriate that he stand trial in the U.S.
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
He used their millisecond advantage against them.
HFTs front run the orders. He puts up a sell order for 1000 shares of stock X for $1.00
before it can execute N HFTs are putting up sell orders at $0.99
This drives actual sellers to $0.95 where he bought , and canceled his sell @$1.00
The HFTs then are no longer front running and the price moves back up to something around $0.98
at which point he sells.
It's really quite simple - he committed fraud, on a large scale. There's nothing specific to high-frequency trading here, though it was easier for him to fool computer programs that to fool people - humans would have been more likely to notice his that his orders were fraudulent. He could have run the same fraud in 1940, though - he just would have been more likely to get caught sooner.
He would find a stock selling for $1.20. He would then place thousands and thousands of orders saying "I'd like to sell this stock for $1". Of course, nobody would then be offering to buy for $1.20, since he said he was selling for $1. He drove the price down with his sell orders. Then he'd cancel those thousands of sell orders, essentially saying "nope, I was lying, I won't really sell for $1". In the meantime, while the price was down due to his bogus offers to sell, he'd buy at $1.05 or whatever. As soon as it was found out that his thousands of sell orders were bogus, the price would go back up to about $1.20, where it belonged. He had bought a $1.20 stock for $1.05 buying fraudulently offering to sell at $1, thousands of times, with no intention of actually doing so.