By Michael Holden
LONDON (Reuters) – The London-based trader accused by U.S. authorities of helping to cause the 2010 Wall Street “flash crash” by spoofing the markets appears in court on Thursday to try to block his extradition to the United States.
Navinder Sarao, 37, arrested by British police on a U.S. warrant last April, has been indicted by a U.S. federal grand jury on 22 criminal counts including wire fraud, commodities fraud and attempted price manipulation.
If he is extradited and convicted, the maximum U.S. sentences for the charges of which he is accused amount to more than 350 years in prison.
Sarao, who ran a one-man operation from his parents’ modest London home in Hounslow near Heathrow airport, is accused of using an automated trading program to “spoof” markets by generating large sell orders that pushed down prices.
Prosecutors say he canceled the trades and bought contracts at lower prices, netting him some $40 million profit.
The flash crash saw the Dow Jones Industrial Average briefly plunge more than 1,000 points on May 6, 2010, temporarily wiping out nearly $1 trillion in market value.
However, according to a draft of a new U.S. academic research paper last month, Sarao had little if anything to do with the event.
Three academics who studied all the trades and orders placed on the day of the crash said it was “highly unlikely” Sarao’s actions, which might have been illegal, could have caused the dramatic market plunge.
However, Sarao’s actual role in events may be of little consequence in his two-day extradition hearing at London’s Westminster Magistrates Court, which will focus not on the facts of the case but whether the U.S. charges are offences under English law and if he should be tried in Britain.
The trader, dubbed “the Hound of Hounslow” by the British press, has denied any wrongdoing and in his only public comment in court last May he said: “I’ve not done anything wrong apart from being good at my job.”
If the judge approves extradition, the decision must be ratified by Britain’s interior minister Theresa May, and Sarao will be able to appeal their rulings.
(Editing by Stephen Addison)
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