London man held for triggering £500bn crash

British financial trader helped trigger the 2010 Wall Street "flash crash" from his London home

Updated: 
Trader in court over shares crash

A British financial trader will appear in court today accused of helping to trigger a stock market crash from his house in London which wiped billions of dollars off the value of US shares in minutes.

The US Department of Justice is requesting the extradition of Navinder Singh Sarao, 36, after he was arrested in connection with the 2010 Wall Street "flash crash".

The 36-year-old, from Hounslow, west London, is charged with wire fraud, commodities fraud and market manipulation.

He is also facing civil claims from US regulators who allege he and his company, Nav Sarao Futures Limited, made 40 million dollars (£27 million) over five years.

Sarao will appear in custody at Westminster Magistrates' Court after being arrested by officers from Scotland Yard's extradition unit on behalf of the US authorities.

The US Department of Justice said Sarao is charged with one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of "spoofing", a practice of bidding or offering with the intent to cancel the bid or offer before execution.

He is accused of using an "automated trading programme" to manipulate the market for futures contracts on the Chicago Mercantile Exchange.

His alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6 2010 that came to be known as the "Flash Crash", US prosecutors claim.

According to the complaint, Sarao allegedly placed multiple orders, then cancelled them without executing them, leading prices to fall.

The flash crash saw the Dow Jones Industrial Average plunge 600 points in five minutes.

The Justice Department statement said: "When prices fell as a result of this activity, Sarao allegedly sold futures contracts, only to buy them back at a lower price. Conversely, when the market moved back upward as the market activity ceased, Sarao allegedly bought contracts, only to sell them at a higher price."

In a separate announcement, the US Commodity Futures Trading Commission (CFTC) released details of civil charges against Sarao and his company Nav Sarao Futures Limited.

The statement alleges market manipulation over five years, and as recently as April 6.

CFTC director of enforcement Aitan Goelman said: "Protecting the integrity and stability of the US futures markets is critical to ensuring a properly-functioning financial system.

"Today's actions make clear that the CFTC, working with its partners on the criminal side, will find and prosecute manipulators of US futures markets wherever they may be."

There was no answer at Sarao's semi-detached home. All of the curtains were closed and a green Vauxhall Corsa was parked outside.

A neighbour, HS Johal, 55, said he knew Sarao's parents, who live at the same address, but he had not seen the suspected fraudster for several years.

"He was such a nice kid but after that I haven't seen him much. I haven't seen him for a long time," he said.

"For me, they are such a nice family. They are not showing off with Mercedes or something like that.

"Navinder didn't have a car. I thought he worked somewhere else. I haven't seen him for years.

"His parents are such nice people. They are a very nice family. Very religious."

He said his father has been ill and his mother has been working two jobs.

When asked if he knew that Sarao was a financial trader, he joked: "I wish I knew. I would have got some money from him."

Mr Johal said Sarao's brother lives in a house on the opposite side of the street.

Anil Puri, 41, who lives near Clairvale Road, said he used to play with Sarao and his two brothers in the street when they were children.

"He was bright. He was good with everyone, like a normal kid.

"He wasn't shy. He was chirpy," he said. "We all used to play together out here quite a few years ago.

"We haven't seen them for a while.

"After school we all went our own way. When we were younger we used to see a lot of them. We still see the family around.

"His dad is always walking down here. His mum walks around as well. They were quite Cockney in their accents. They were born and bred here."

Read more on AOL Money

What you can learn from the world's best investors

Where to invest and where to avoid this year

Osborne to sell £3bn Lloyds shares

U.K. Man Arrested on Charges Tied to 'Flash Crash'