Indian-Origin Trader Arrested In UK Over 2010 'Flash Crash'

From April 2010 to present, he and his firm have profited over USD 40 million in total from the E-mini S&P trading.

Sarao's alleged manipulation contributed to a major drop in the US stock market on May 6, 2010, that came to be known as the "Flash Crash". On that date, the Dow Jones Industrial Average fell by approximately 600 points in a five-minute span, following a drop in the price of E-Minis.

According to the complaint, Sarao allegedly employed a "dynamic layering" scheme to affect the price of E-Minis.

By allegedly placing multiple, simultaneous, large-volume sell orders at different price points-a technique known as layering -Sarao created the appearance of substantial supply in the market.

As part of the scheme, he allegedly modified these orders frequently so that they remained close to the market price, and typically canceled the orders without executing them. When prices fell as a result of this activity, Sarao allegedly sold futures contracts only to buy them back at a lower price.

"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," CFTC Director of Enforcement Aitan Goelman said.

In its ongoing litigation, the CFTC is seeking permanent injunctive relief, disgorgement, civil monetary penalties, trading suspensions or bans, and payment of costs and fees.

U.S. District Judge Andrea Wood has issued an order freezing and preserving assets under Sarao and his firm's control. The court has scheduled a hearing for May 1, 2015, on the CFTC's motion for a preliminary injunction.
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