Futures trader is arrested in Great Britain and accused of role in ‘Flash Crash’

A futures trader was arrested Tuesday in Great Britain for his alleged involvement in the “Flash Crash” of 2010 in which the Dow Jones industrial average plunged 600 points in five minutes.

After the arrest of Navinder Singh Sarao, American authorities — who are seeking Sarao’s extradition — unsealed a federal criminal complaint in Chicago charging him with multiple counts of fraud and manipulation.

The complaint says Sarao, 37, from the west London suburb of Hounslow, used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts on the Chicago Mercantile Exchange.

The Flash Crash rattled investors and left many wondering whether the stock market was rigged against them. Regulators eventually traced the catalyst to trading in E-Mini S&P 500 futures.

Early government inquiries into the event had included studies of the activities of three area businesses, among others. A 151-page report included information about Overland Park-based mutual fund company Waddell & Reed Financial, Lenexa-based exchange operator Bats Global Markets and Kansas City-based Tradebot Systems. Each had defended its actions that day.

Saroa’s manipulation of trades “earned him significant profits,” a Tuesday statement from the U.S. Department of Justice alleges. It did not provide a figure.

The name of a defense attorney for Sarao who could comment wasn’t available in the court documents unsealed in Chicago.

Sarao is charged with 10 counts each of commodities fraud and commodities manipulation, a count of wire fraud and a count of “spoofing,” which involves bidding with the intent of quickly canceling the bid.

This story was originally published April 21, 2015 at 6:48 PM with the headline "Futures trader is arrested in Great Britain and accused of role in ‘Flash Crash’."