Navinder Singh Sarao, the British trader arrested this week over his role in the 2010 U.S. flash crash, couldn’t have been responsible for that fateful day on Wall Street, according to his former employer.
“Did Navinder Sarao cause the flash crash? No, it’s not possible,” Paolo Rossi, who founded Futex, told Bloomberg TV on Friday. “Was he a contributing factor? Probably, a million things were a contributing factor.”
Sarao was arrested Tuesday at the home he shares with his parents near Heathrow airport after U.S. prosecutors filed charges against him including fraud and market manipulation. He was responsible for one in five sell orders during the frenzy on May 6, 2010, when investors saw almost $1 trillion of value erased from U.S. stocks in just minutes, U.S. regulators said, and made $900,000 in profit that day. He is fighting extradition and was granted a 5 million-pound ($7.6 million) bail on Wednesday.
“Navinder worked hard and traded diligently whilst at Futex,” Futex said in a statement after the Bloomberg interview. “There were no incidents of any impropriety during his time with Futex. Navinder’s method involved no use of algorithmic trading and as such was purely a ‘point and click’ style of trading.”
Sarao worked at the firm from 2003 to 2008, according to the statement, after applying for a role on their trainee program in 2002. Futex is one of dozens of firms across the U.K. offering individuals a place to trade. In exchange for a monthly fee and a share of any profits the firm provides desks, screens and the chance to pick up tips, as well as training programs and financial backing for selected individuals.
Sarao was one of the 20 to 25 sponsored traders it selects each year, Rossi said. They’re trained and given a trading account and full financial backing upon graduating from the program, according to the Futex website. Sarao left after five years because he didn’t want to share his profits with Futex any more, according to Rossi.
Still, Sarao wasn’t that interested in money, Rossi said. That view was echoed in a post on Twitter this week by a person identifying himself as Adam Whiting, who said he sat next to Sarao for six months in about 2006. “From what I remember Nav only loved making money, not spending it,” he wrote.
Sarao’s lack of interest in money was “almost an eccentricity,” Rossi said, adding that he considers Sarao a friend but hasn’t seen him since he left the firm.
“Nav was always going to the kind of person that I believed would be legendary, potentially legendary in some way in the future,” said Rossi. He had the potential “to be remembered as being one of the world’s great traders.”