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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.
C'mon Musk, get that Mars train running so all you fuckwit Yanks can fuck off and leave the rest of us alone.
"a possible maximum sentence of 380 years."
You don't even get that for murder
As I said here:
http://www.theregister.co.uk/2...
blaming the bloke on the other side of the Atlantic when it seems that poor engineering must have been in place even to allow what he did, is like blaming my kids when the curtains come down again (I *know* they need fixing, and have for a while).
Rgds
Damon
http://m.earth.org.uk/
... was not trading under the auspices of an investment bank. The bigger criminals don't like competition.
The US froze his assets. That's why he couldn't post bail.
There is no such thing in England as having to post bail. You can be released on bail with bail conditions, but you don't have to pay anything, because that idea is fucking stupid and just favours the rich innocent over the poor innocent (and everyone is innocent at this stage), making justice non-blind. Everything about this summary doesn't fit together.
Agreed. I've seen too many stories of people that are stuck in jail for minor violations simply because they can't pay the bail costs. What's worse is for those people it often means they lose their jobs and can lose their possessions and home if they are kept in jail long enough even though they've never been tried. There's no way to support that behavior by our (USA) legal system.
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.
by allowing their buddies (former working colleagues) on the Street to engage in HFT.
The Flash Crash should have proven that HFT is a financial weapon of mass destruction with very few controls.
But wait a few months and the SEC will blame it all on Russian hackers.
Also he had a "millisecond advantage" over US traders? Did his transactions travel faster than the speed of light? It just doesn't add up.
There is no such thing in England as having to post bail. You can be released on bail with bail conditions, but you don't have to pay anything.
Sigh, why bother posting this when 2 seconds in Google can tell you he had a bail of £5 million set but couldn't pay because his assets were frozen. Not everyone gets set a monetary bail but it happens sometimes.
The crime is making orders with the intent to cancel before being fulfilled. ... The intent to cancel, in order to create a false market perception, is the crime. ... a pattern of cancelled-while-unfulfilled orders, combined with other orders that profit from the market perception that the unfulfilled orders create, is a very clear establishment of such intent.
Is it also an establishment of intent if you (as a large financial firm) deploy, in actual trading on real markets with real money, an algorithm that exhibits such behavior? If, in addition, you KEEP it deployed even after its behavior is noticed and complained about in public media of the sort likely to be read by trading professionals?
And it is something that the traders at Goldman Sachs can make a fortune without doing.
But it's something that they can make a BIGGER fortune by DOING. And something that can count toward the rise of individuals and groups through the corporate ladder and pay scale.
While don't recall if G.S. was specifically one of the organizations complained about (and am not going to spend the time right now digging through archives to check), I DO recall com"plaints about high-speed traders taking advantage of the cancellation features of the online market engines in just this way.
One of the advantages of shaving milliseconds off the communication delays and algorithms that was specifically mentioned (once the pattern was observed) was the ability to send an order and a cancellation in rapid enough succession that it could not be pounced on (and thus didn't really risk money), sending price signals that tricked competing, slightly less high-speed or well-tuned, algorithms into making other bad trades from which their operators lost and the perpetrators gained.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
My research is only coming up with a rule against financial spoofing encoded in law as of December 2010. In other words, he's being extradited for something that wasn't even a law until six months after he did the thing.
It's bollocks that we normies can't take advantage of features in the stock exchange because they might cause special snowflake trading programs to shit the bed.
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.
It's probably a bad idea to leave your door unlocked. That doesn't excuse the thief who takes advantage of the fact the door was unlocked.
This guy entered thousands and thousands of fraudulent offers, with full intent to reneg on those offers. Fraud isn't okay just because you managed to fool the victim.
Take away the ability to cancel orders.
On, it's renege. Two, isn't that what HFT is all about?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
If the order system let him make the offer, and didn't enforce it by making him pay for it, how is it fraud? Why didn't the trading system just ban his account the first time or first day he did this? Why does the ability to cancel a trade exist at all? Shouldn't the trading process be :
1. Wire the money or at least electronically commit the funds in a brokerage account to the trade
2. Send the buy or sell order once the money to support the trade is there
3. Transfer the stock between brokerage accounts at the clearing price.
Once again we see an individual attempting to do something which attracts criminal charges... unless they're in the right club. Do I see any bankers getting charged for any of the criminal dealings that led to all the bank collapses ? No. Unless it's Iceland who seem to a) have balls and b) still actually govern themselves.
And once again we see that the UK is no longer a sovereign country but is simply a fiefdom of the corporate USA oligarchies.
If a UK citizen has committed a crime on UK soil they should be tried in a UK court by a UK judge.
Fuck the American "justice" system where the men with the money make the rules.
Sky subscribers are morons. They pay to be advertised at !
There are hundreds of HFT algorithms making millions of trades a day operating under this explicit premise.
There are support algorithms which are never written to trade a dime, whose only purpose is to spoof and cancel in support of other algorithms, or to adjust market conditions.
There are algorithms written to quote stuff, dummy prices, and sniff out stops.
At the end of the day, all these algorithms close their accounts and end up not holding a single share.
The intent has always been to defraud, never to trade.
No one making money on Wall Street is playing by the rules. You are a financial sector shill.
There is no such thing in England as having to post bail.
From TFS:
"[...] The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail."
Google reports a £5 million bail.
I don't know how it works in the UK, but in most civilized places, "frozen" assets can be used to defend ones self (including posting bail). I guess the UK is no longer a civilized place.
Learn to love Alaska
The US can't freeze UK assets. The UK froze his assets at the request of the US? And when that happened to Kim Dotcom, the NZ government allowed Kim access to his funds for the purposes of legal defense. That generally includes posting bail/bond. Why does the UK not recognize the basic right to a legal defense?
Learn to love Alaska
Bail is definitely able to be set in the U.K.
He used their millisecond advantage against them.
What if all trades were batched up and handled on something like one-second boundaries, i.e., kill off high-frequency trading? What would be lost? As far as I can tell, almost all of its effect so far has been to advantage the high end traders who have the resources to compete. There would also seem to be substantial risks of instability. Since the traders are free to use any algorithm they like there's no way to guarantee the stability of the whole system.
The basis of a bail (via money) does have a good reason at least historically. Its intended purpose was solely to discourage you from skipping out on your court appearance. And if you did, to make sure that the government had money, provided by you and not the taxpayers, to have a bounty hunter track you down and drag you back to court. However today it is hard to justify it as anything but a punishment for people charged with a crime and further punishment for those who don't have the means to post the bond (often having to go to bondsmen, who charges them for the service). People that are no flight risk or are hit with tens of thousands in bail and judges routinely set bails far outside of the reach of the defendant for no reason other than to prevent them from posting bail at all (which is illegal). There's a case that the NY Times did a story on where someone was held for almost a month for the "crime" of having a drinking straw (police called it drug paraphernalia), while the prosecutor tried to get them to sign a plea deal. During his incarceration, and while a report saying that no controlled substances were found on the straw sat in the DAs office, he was severely beaten.
http://www.nytimes.com/2015/08/16/magazine/the-bail-trap.html?_r=0
isn't that what HFT is all about?
No. HFT is legitimate buying and selling, just done at high speed. An order goes through, ownership is transferred... everything you'd expect from a legitimate business, just executed very quickly. What's different here is that this guy allegedly posted transaction orders just long enough to affect market prices, then canceling them, capitalizing on the price fluctuations with separate legitimate trades.
Cancelling orders is a protection mechanism for accidentally making stupid orders, like putting an extra digit in the price. When exploited to significantly alter the market, it's a bad-faith contract, which is generally illegal in most countries, though the particular codified law varies wildly.
You do not have a moral or legal right to do absolutely anything you want.
> To me it is pretty clear that he put in the sell order, then realised he had made a mistake (perhaps a computer error) and withdrew the order before it was fulfilled.
He did it for SIX YEARS , thousands of times. He admits what he didb. His defense is essentially "there's no law against commiting fraud extremely quickly." There IS a law against comitting fraud . Doing it quickly doesn't make it legal.
The system has been changed to avoid a repeat.
Imagine you order a cable from Newegg, then six hours later you realize you ordered the wrong thing , so you cancel the order . It's useful to you to be able to cancel, and only costs Newegg a few cents to handle the cancelled order. The ability to cancel AN order is good. Imagine you had a scheme where you placed 19,000 seperate orders from online retailers totaling many millions of dollars, then cancelled them all. Somehow you were making money doing these bogus orders. You kept doing this for six years. You'd expect someone might want to have a word with you.
> The price of a stock is the price at which the last transaction took place.
Suppose a stock was last traded at $10. Does that mean if I want to sell the stock NOW, it'll necesarily sell for $10? Which then becomes the new "last transaction", so that stock permanently buys and sells for $10?
No, there are two CURRENT prices for a stock right now. There's the price someone is offering to sell it for, and the price someone is offering to buy it. These are called "ask" and "bid".
Suppose there are 1,000 orders offering to sell a stock at $55. You want to buy. What price will you offer to buy? You'll offer about $55, of you actually want to buy it, because you know that people are willing to sell it for $55.
Maybe you'd still want to buy even if the offer to sell was $100, but you're damn sure not going to offer $100 when you know people will sell it to you for $55!
If those thousands of offers to sell at $55 were fake you wouldn't know it immediately. You'd still offer to buy at $55, or more likely offer $54.99875 and see if anybody takes it. Without the fake offers to sell, you'd see the real sell orders at $100 and as a buyer you'd offer $99.99875.
If that door is the door to a nuclear power plant, then the amount of responsibility on the party leaving it open is far bigger than on the party using that mistake. Seriously, missing safety features are gross negligence and should routinely be treated the same as intent. Of course, the same fraud is run by other, very powerful players, so this _is_ intent.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Ps people can run the exact same scam on eBay "selling" popular items like iPhones or hard drives, or in some cities on Craigslist. It really has nothing to do with high frequency trading or even with stocks. The only requirement is a marketplace where you can advertise a very low price and string buyers along long enough for real sellers to get discouraged about lack of buyers and reduce their price a bit.
Suppose each day on eBay 20 new iphones are sold, at just about $600 each. Sellers know that every day many buyers bid, so they don't have to set a reserve price at $590 - they know bidders will get the price to about $600. So each day 20 people sell and 20 people buy, for about $600 (or whateve this month's going price is).
Now suppose I go find a few listings with a low reserve or no reserve. They close at 1PM, 1:20PM, and 1:45PM. I could then post 100 listings offering to sell iphones for $400, closing at 1:50M. With a bunch of sellers offering to sell at $400, how much will bidders bid on iphones from the other sellers? Not more than $400, of course.
So between 1:00PM and 1:50PM buyers won't offer more than $400. I bid $405 on the listings ending during that time period and win. Then I click to cancel all my fake offers to sell for $400, claiming that my box full of iphones got stolen or rained on. Now I've bought three iphones for $405 each.
The next day, my fake listings are gone, so the price is back to normal at $600. I sell for $600 each the phones I bought for $405, a profit of $195 per phone.
Ebay has a button for sellers to cancel a sale, in case an itembdoes get rained on or something after it's posted. Cancelling A sale is okay. If I do this thousands and thousands of times, fraudulently posting offers I have no intent to honor, that's fraud and if I kept it up for six years I might well end up in jail.
To understand why some other trader's pricing algorithm doesn't really matter, see this explanation of how you can run the exact same scam on ebay:
https://slashdot.org/comments....
Yes, people will use one small order for the purpose of gauging the market. One order among many has little to no effect.
This guy placed 19,000 large fake orders for the purpose of defrauding the market.
But ebay would (or at least should) catch you if you did that a bunch of times. If they allowed someone to commit that transaction thousands of times then it'd seriously undermine the entire platform.
Bail is definitely able to be set in the U.K.
No, it's not.
https://www.gov.uk/charged-crime/bail
Either a judge (or in limited instances a magistrate) deems you suitable to be allowed out on bail, or he doesn't. A surety *never* needs to be posted to secure bail in the UK; in the very, very limited cases where a monetary surety is required, all that is needed is for the defendant to demonstrate that he has access to the funds. No transfer or bonding actually takes place.
Please stop commenting about things that you clearly know fuck all about.
I don't always crash the markets. But when I do I do it from my parents basement.
Trade Frosty my friend.
What a load of horse crap. No way did this one guy crash the market.
The markets are rigged. Since 2007 we do not have a market economy.
Everything is now planned by the Fed.
We ARE now the Russians.
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
I couldn't agree more.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
He made 40-million in a few months but he couldn't afford bail ? Must be a graduate of Trump university.
(Seriously - his accounts are probably frozen as is common in financial crimes prosecution - but this is not usually allowed to interfere with bail).
Unicode killed the ASCII-art *
It does, except when the US tells it not to.
See also: Gary McKinnon, Barclays Five.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I thought that when I first read about HFT. Dictum Meum Pactum and all that.
But reading around it seemed that's exactly what they were doing.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
The US froze his assets. That's why he couldn't post bail.
Not true. He had $39 million in a Swiss bank account, which he didn't disclose. After spending a few months in jail, he turned over the account to the US authorities and was released on bail. http://www.bloomberg.com/news/...
> But ebay would (or at least should) catch you if you did that a bunch of times.
I suspect eBay would catch you after a while UNLESS you were clever. Certainly there are ways to set up a new eBay account under a new identity, I've done that. All you need is a different email address and maybe a new prepaid Visa. I have one eBay account for business-related transactions and one for personal. A clever person could probably find a way to keep setting up new accounts as old ones got locked.
> If they allowed someone to commit that transaction thousands of times then it'd seriously undermine the entire platform.
The guy is TFA DID seriously undermine the US stock market, for a short time, so the markets now have mechanisms to protect against a repeat. Some people, like Michael McCarthy, lost a lot of of money, as in stocks that normally trade for $100 were down to $10. Proctor and Gamble lost over 30% of it's value, then quickly recovered most of it.
https://www.thestreet.com/stor...
It really, really has nothing to do with high frequency traders. Lots of people got screwed. Michael McCarthy is a typical example:
https://www.thestreet.com/stor...
As I've explained in another post, people can run the exact same scam on eBay with iPhones, or "selling" F-150 pickups on Craigslist.
I don't get it. He posted selling orders in the FUTURE, right? So, the wall street computers followed his bait, BECAUSE THEY CHOSE SO, right? How is that HIS fault? This sounds like wall street saying "you are being punished by beating us at our game" or like we say in brazil: "perdeu e levou a bola para casa"
nike tn 2016 Depuis le hall d’entrée, elle voit l’ascenseur là, qui semble l’attendre, à battants ouverts. L’idée l’effleure à peine - le louper ! - que l’angoisse l’enserre. Mue par pur réflexe, elle se jette en une sorte de pas de course, imprécise et gauche, sur ses talons hauts, retenant son sac à longue bandoulière qui lui bat la cuisse. Elle se sent stupide et ridicule. Elle pouvait largement attendre l’arrivée du second appareil. Précipitée dans le hall, désert en cette heure matinale, elle sait bien, comme à son ordinaire, qu’elle arrive en avance à son rendez-vous.L’homme, à l’intérieur, l’a vue courir vers lui. Il presse le bouton qui commande le maintien des portes ouvertes. Dans sa course approximative, elle sent vriller sa cheville droite et trébuche.La honte l’envahit. Se jetant dans la cabine, échevelée, luisante, écarlate, elle se dit que la prochaine, peut-être, aurait été vide. Elle s’y serait retrouvée seule, tranquille.
This is exactly how Lord Rothschild Took control of the entirety of the English market a few hundred years ago. Essentially how the banking industry started its reign of power.