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He was working there during the 2008 financial crisis. Despite making $70 million trading out of his bedroom, Sarao reportedly has no money left. The Complaint had been filed under seal on April 17, 2015 and kept sealed until todays arrest of Sarao by British authorities acting at the request of the U.S. Department of Justice (DOJ). Generally speaking, it was frowned upon at Futex to leave a position open overnight because you couldn't react quickly if the market moved against you. Over the next few hours, DAX futures continued to tumble in line with markets around the world, but by late afternoon the wall of bids had reappeared and prices started to edge up again. They needn't have worried. His software took advantage of this by placing thousands of orders before quickly cancelling or changing them, once he had created artificial demand for other traders to buy or sell that asset. In May 2014, a CFTC (Commodity Futures Trading Commission) report concluded that Sarao did not cause the crash but helped contribute by "demanding immediacy ahead of other market participants.". Navinder Singh Sarao is a London-based trader who was arrested on April 21, 2015 on charges his firm, Nav Sarao Futures Limited PLC, contributed to the May 2010 "Flash Crash" in which the Dow Jones Industrial Average fell 600 points in five minutes. We use Now 42, Navinder Sarao is a self-taught stock market trader who helped cause panic in US markets in 2010 from a bedroom in his parents' home in Hounslow, West London. The CFTC Complaint charges the . Originally Answered: What was the strategy used by Navinder Singh Sarao for the 2010 Dow Crash? Somebody out there appeared to have an insatiable appetite for DAX futures in the face of strong signals that prices should be going down. The CFTC said he also used a spoofing technique that placed 188-lot, and 289-lot orders on the sell side of the market and cancelled them before the orders could be executed. Check if your The E-mini S&P 500 is a stock market index futures contract based on the Standard & Poors 500 Index and is one of the most popular and liquid equity index futures contracts in the world. Government attorneys represent the United States. Overview of SARAO's Manipulative Activity 14. analyse how our Sites are used. After all, a traders' job is to exploit mispricing in the markets - that's how they make money, although it's supposed to be because they are taking a view on the economy or on an individual stock. [7], In November of 2016 Sarao was extradited to the U.S. and pleaded guilty in a Chicago federal court to spoofing and wire fraud. This paper investigates whether fleeting orders account for market illiquidity. The CME contacted SARAO about this activity in March 2009 and notified him, via correspondence dated May 6, 2010, that "all orders entered on Globex during the pre-opening are expected to be entered in good faith for the purpose of executing bona fide transactions."