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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.
"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/
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.
Like the old joke about the UK simply being a large unsinkable US aircraft carrier.
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.
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?
When the shit hits the fan, everybody runs to hide behind the US militarily, and everybody, including enemies, runs to hide their money in safe US dollars.
Complaints are akin to your kids being embarrassed you joked with the supermarket cashier.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
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.
So he abused a flaw in the cheating bastards who are doing high frequency trading. Like finding a flaw in the aimbots the cheaters are using in an FPS game and using it to get kills. And they want to jail him for 380 years ("ban him from life") for that.
Looking further into it: You're right, his assets were frozen but enough was eventually released to meet the bail requirements. I've almost no doubt he did way was alleged - indeed it's said he modified one of his orders 7.5M times. What I'd like to know is how is this different from any other high frequency trading?
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.
We we're using Apple Maps, it's not our fault.
When the British open fire, the Germans take cover.
When the Germans open fire, the British take cover.
When the Americans open fire, everybody takes cover.
That dates back to WW2.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
If the trajectory of your rifle round intentionally caused a bullet cross the border between the US and Canada and inflict damage or loss of life in Canada, then you would have committed an international act of terrorism, or a transnational crime.
I believe you will find that it is against the laws of both the US and Canada to shoot and kill a person, and the two countries have agreements to mutually co-operate with each other to obtain evidence of crime and assure your timely prosecution.
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.
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."