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'Flash crash' trader stays in jail

Published 29/04/2015

Navinder Singh Sarao, who is fighting plans to extradite him to America to face trial, is due to appear at Westminster Magistrates' Court in London.
Navinder Singh Sarao, who is fighting plans to extradite him to America to face trial, is due to appear at Westminster Magistrates' Court in London.

A British financial trader accused of helping trigger a multi-billion dollar US stock market crash from his London home has been remanded in custody and granted another week to raise £5 million in bail.

Navinder Singh Sarao, 36, who is fighting extradition to the US, was further detained after he was unable to provide the full amount again when he appeared at Westminster Magistrates' Court.

The court was told bail conditions had not yet been met and District Judge Jeremy Coleman gave him another seven days to raise the sum.

Sarao was held at the request of US authorities over allegations he helped cause the 2010 Wall Street "Flash Crash" from his parents' home 3,500 miles away in Hounslow, west London.

The former bank worker and Brunel University student was granted bail at a hearing last week but was told he would not be released until he had provided security of £5 million and £50,000 from his parents, as well as meeting other conditions.

The court heard last week that Sarao has £5 million in his trading account, of which £4.7 million is a loan. But he was brought back to court today after failing to come up with the bail money.

Wearing a grey tracksuit, he spoke only to confirm his address and date of birth. His defence lawyer, Joel Smith, asked the court to grant a seven-day bail extension.

He said: "Bail was granted last week at an initial hearing subject to conditions. Those conditions have not been met."

Allowing Sarao more time to come up with the bail money, Judge Coleman told him: "So you were granted bail on the last occasion. You have not met the conditions of bail as yet.

"I re-bail you on exactly the same conditions as before. If you meet the conditions you will be released. If you don't meet the conditions you will be back here on May 6."

The court also set an extradition hearing date for September 24.

Sarao, who was arrested on April 21, has vowed to fight plans to extradite him to the US, where he faces 22 charges including wire fraud, commodities fraud and market manipulation, which carry sentences totalling a maximum of 380 years.

The US Justice Department claims Sarao and his company, Nav Sarao Futures Limited, made £26 million (40 million US dollars) illegally over five years.

In court papers lodged in America, it is alleged that he claimed he told US regulators to ''kiss my ass'' in May 2010 after they wrote to him telling him his orders must be for ''bona fide transactions''.

He is accused of using an ''automated trading programme'' to manipulate the market for futures contracts on the Chicago Mercantile Exchange.

His alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6 2010 which came to be known as the ''Flash Crash'', US prosecutors have said.

Sarao is accused of placing multiple orders before cancelling them without executing them, causing prices to fall. US prosecutors claim that when the prices fell, Sarao then sold futures contracts, only to buy them back at a lower price.

Conversely, when the market moved back up as the activity ceased, Sarao allegedly bought contracts, only to sell them at a higher price, the US Justice Department said.

The Flash Crash saw the Dow Jones Industrial Average plunge 600 points in five minutes, causing tens of billions of pounds to be wiped off the value of US shares.

A review hearing for the case was also listed for May 26.

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