- Navinder Sarao was arrested and charged by the U.S. last year
- Sarao is accused of making $40 million from spoofing markets
Navinder Singh Sarao, the British trader accused of making millions of dollars spoofing markets from his bedroom, came a step closer to being sent to the U.S. to face fraud charges after a London court ruled in favor of his extradition.
The 37-year-old, who looked resigned as the judgment was handed down, will appeal Wednesday’s decision by Judge Quentin Purdy to the High Court. The ruling comes nearly a year after his arrest at his parent’s house near London’s Heathrow Airport made headlines, as people struggled to understand how such a low-profile figure could have made as much as $40 million from bogus trading.
“We’re disappointed,” his attorney Richard Egan told reporters outside the courtroom after the extradition ruling. “We had a strong argument.”
Prosecutors allege Sarao spoofed CME Group Inc.’s stock futures market over four years. His winnings included a $900,000 profit on May 6, 2010, when a trading frenzy known as the “Flash Crash” saw almost $1 trillion briefly wiped from the value of American equities. U.S. authorities say Sarao contributed to the mayhem and have been seeking his extradition so he can stand trial for 22 counts of fraud and market manipulation.
Wednesday’s ruling must still be signed off by U.K. Home Secretary Theresa May, though this is largely seen as a rubber stamp. May has two months to approve the extradition, the court said. Sarao, who wore a red sweater and black trousers in court, remains free on bail.
Egan highlighted a portion of Judge Purdy’s decision to reporters that said the causes of the Flash Crash were “not a single action and cannot on any view be laid wholly or mostly at Navinder Sarao’s door, although he was active on the day. In any event this is only a single trading day in over 400 relied upon by the prosecution.”
Sarao’s lawyers sought to undermine U.S. claims at a hearing last month by arguing his actions weren’t a crime in the U.K. and, as a British citizen, any trial should take place in England. The prosecution countered that while Sarao was in the U.K., most of the damage was on a U.S. trading platform, adding the U.K. Financial Conduct Authority carried out its own investigation and didn’t pursue charges.
Sarao spent four months in prison last year after his arrest while he tried to obtain bail. He won his release by disclosing that he had about 25 million pounds ($35 million) of assets in Switzerland. Since his arrest, Sarao has been diagnosed with Asperger’s Syndrome and had treatment for Post-Traumatic Stress Disorder.
“The world is an increasingly small place,” said Barry Vitou, a London-based lawyer at Pinsent Masons. “The latest ruling underscores the U.S. long arm approach to law enforcement and the U.K.’s willingness to go along with it. The takeaway is: just because you are thousands of miles away, don’t assume your actions will escape a prosecuting agency."