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'Good at job' trader stays in jail

Published 06/05/2015

Sketch by court artist Elizabeth Cook of financial trader Navinder Singh Sarao who is fighting extradition to the US
Sketch by court artist Elizabeth Cook of financial trader Navinder Singh Sarao who is fighting extradition to the US

A British financial trader accused of helping trigger a multibillion-dollar US stock market crash from his London home has claimed he was just good at his job.

Navinder Singh Sarao, 36, who is fighting extradition to the US, appeared at Westminster Magistrates' Court, where he failed in a bid to have the payment of a £5 million security removed from his bail conditions.

As he was being led away from the dock he turned to the public gallery, held his arms out wide and declared: "I haven't done anything wrong apart from being good at my job.

"How is this allowed to go on, man?"

Sarao was arrested on April 21 at the request of the US authorities, who want him extradited to face allegations that he helped cause the 2010 Wall Street "Flash Crash" from his parents' home 3,500 miles (5,630km) away in Hounslow, west London.

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

He faces 22 charges including wire fraud, commodities fraud and market manipulation, which carry sentences totalling a maximum of 380 years.

The former bank worker and Brunel University student has had his assets frozen and has remained in custody since his arrest because the £5 million security has not been paid. A security of £50,000 must also be provided by his parents, as well as other conditions.

District Judge Quentin Purdy set the terms of bail on April 22 after Sarao's legal team told the court he has £5 million in his trading account, of which £4.7 million is a loan.

James Lewis QC, defending, told today's hearing that at that time the lawyers did not know Sarao could not access the money.

He said: "We only found out the very next day a worldwide freezing order had been imposed.

"This was in fact obtained immediately before his arrest, as one might expect, by the American authorities but it was not notified to us."

He added: "It is now impossible to supply the security that was ordered by Mr Purdy as a condition of his bail."

But District Judge Elizabeth Roscoe, who presided over the case today, ruled that the bail conditions should not be altered.

She told Sarao: "Bearing in mind the nature of the allegations made - not just the amount but the manner of them as well - I am not of the opinion that £50,000 together with the other conditions would be sufficient to secure your attendance at court."

After the ruling, Mr Lewis stood up and told Ms Roscoe: "We'll just go to the High Court."

Carl Kelvin, representing the US authorities, earlier told the hearing: "It's a very serious allegation. You have seen from the (court) papers the allegation is approximately 40 million dollars obtained over approximately a four-year period by manipulating the market."

He added: "A security of £50,000, quite frankly, would be inadequate in this case."

Mr Kelvin also said Sarao has financial accounts based in the Cayman Islands in the Caribbean.

In court papers lodged in America, it is alleged that Sarao claimed he told US regulators to ''kiss my ass'' in May 2010 after they wrote to him telling him his trading 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, of Clairvale Road, Hounslow, 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 is listed for May 26 and the full extradition hearing is due to take place on September 24.

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