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'Hound of Hounslow' pleads guilty in US court to 'flash crash' fraud

Published 10/11/2016

Trader Navinder Singh Sarao outside Westminster Magistrates' Court, London, before his extradition to the US
Trader Navinder Singh Sarao outside Westminster Magistrates' Court, London, before his extradition to the US

The British financial trader dubbed the Hound of Hounslow has been allowed to return from the US after admitting helping trigger a multi-billion-dollar Wall Street crash from his west London home.

Navinder Singh Sarao made at least 12.8 million US dollars (£10.3 million) over several years through market manipulation schemes, including helping to cause a "flash crash" in 2010, according to US prosecutors.

The talented mathematician could still go to jail for decades for manipulating the Chicago Mercantile Exchange and causing the Dow Jones to plummet, rattling investors in the process and leaving many wondering if the market was rigged.

However a US judge agreed to release the 37-year-old on a 750,000 dollar (£604,000) bond secured against his parents' Hounslow semi while he helps investigators.

Sarao was sent to the US in October after losing a High Court challenge against a decision to extradite him over the market manipulation, which caused the Dow Jones Industrial Average plunge 600 points in five minutes, wiping tens of billions of pounds off the value of US shares.

US authorities claimed during court appearances in the UK that Sarao made 875,000 US dollars (about £716,000) on May 6 2010, the day of the crash and he faced 22 charges carrying sentences totalling a maximum of 380 years.

Sarao appeared wearing leg shackles in a Chicago court room on Wednesday where he admitted one count of wire fraud and one of spoofing, which refers to bidding with the intent of quickly cancelling the bid to manipulate prices, under a plea bargain.

Associated Press said the case judge told the Briton he faces up to 30 years in prison after admitting to the crimes orchestrated from his parents' home 3,500 miles away in west London.

According to documents filed with the court he emailed a broker in the wake of flash crash bragging how he told a Chicago exchange official who questioned his trades "to kiss my" behind.

However he also wrote that he had carried out some trade merely to show a friend how the high frequency trading market worked.

Defence lawyer Roger Burlingame told the court that his socially awkward client had lived in the same room at his parents' house for most his life.

Prosecutors said his co-operation would be more effective if he was not behind bars, although Sarao was warned he risked "destroying his parents' lives" if he violates the terms of his bond.

If he fully co-operates with investigators prosecutors may ask for a prison term of less than six-and-a-half years.

At his first extradition hearing at Westminster Magistrates' Court in March, District Judge Quentin Purdy ruled that the Londoner, of Clairvale Road, Hounslow, could be sent to stand trial in the US.

Lawyers for the former bank worker and Brunel University student argued at the time that his actions did not constitute a crime.

Two judges at the High Court in London in October refused to give him permission to challenge the extradition order and he was later sent across the Atlantic.

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