Flash Crash Trader’s 10-Year Spoofing Saga Gets Hollywood Ending
- Sarao sentenced to confinement in home where he traded futures
- Prosecutors say he helped them catch other market spoofers
In the end, the Navinder Sarao story got the Hollywood ending it deserved.
Five years after the trader was arrested in his parents’ suburban London home for manipulating markets, the 41-year-old was ordered by a U.S. judge to go back there for a year of house arrest, holed up in the same bedroom where he had committed his crimes. The “Hound of Hounslow,” as he was dubbed in the British press, was grounded.
During Tuesday’s sentencing hearing in Chicago, even the prosecutors urged the judge to let Sarao go home a free man, citing his autism diagnosis and his “extraordinary cooperation” in helping the government build other cases. But U.S. District Judge Virginia Kendall insisted that the serial spoofer face some kind of punishment for endangering the global economy, beyond the four months he’d already served in the U.K.
Sarao may have treated markets like a computer game, Kendall said, but that “does not impact the seriousness of what happened” on May 6, 2010, when markets lost $1 trillion in five minutes before rebounding. Exactly how much Sarao’s trading contributed to the so-called Flash Crash remains a subject of considerable debate.
The sentencing caps one of the more remarkable financial stories in recent memory, one that reveals much about the precarious nature of modern electronic financial markets and the failure of regulators and exchanges to adequately police them.