The UK-based financial trader accused of being a major contributor to the May 2010 stock market “flash crash” is being released from prison after meeting bail. Navinder Singh Sarao lives in London and is currently fighting extradition to the U.S.
Sarao, who faces 22 counts of fraud and commodity manipulation in the U.S., saw his bail set at £50,000 at Westminster magistrates court Friday.
Until today, Sarao had been incarcerated at Wandsworth prison in London, after being denied bail after his arrest in April.
More on “flash crash” trader Sarao
On Friday, Sarao was granted a bail reduction to £50,000. James Lewis QC, his lawyer, told the court on Friday that amount has already been paid. Sarao was also told he cannot leave the area within the M25 motorway surrounding London or make stock trades on the internet.
Sarao, who is 36, apparently earned tens of millions of dollars trading stocks and options from personal accounts at his parents’ house in suburban west London. The charges against him allege that he used an illegal spoofing technique to manipulate the market. In specific, Sarao used software to offer to make trades and get price information, and then yank the offers at the last second before they were executed. He would then immediately make trades using that information to get the best possible price.
According to U.S. Department of Justice legal filings, Sarao’s personal trading in e-mini S&P 500 futures on the Chicago Mercantile Exchange was at such a high volume in May 2010 that it directly contributed to the “flash crash”, when U.S. equities markets dropped 600 points within minutes on no news and then bounced all the way back within a half hour or so.
The lawyer for the U.S. DOJ noted he would not oppose the bail reduction. He noted that over $45 million of alleged flash crash trader Sarao’s assets remain subject to a worldwide freeze order, including the $7.6 million from liquid accounts moved to an escrow account in the U.S.
Of note, nearly all of Sarao’s remaining funds are in an account in Switzerland and cannot be transferred until January 2017.