US recommends no jail time for flash crash trader
US prosecutors have recommended that the British trader linked to the so-called flash crash in 2010 should not receive any additional jail time.
Navinder Singh Sarao pleaded guilty to spoofing and wire fraud in 2016 for his role in the crash of 6 May 2010, when markets dropped five per cent in five minutes.
But in a court memo filed late last night, the US government said Sarao should not serve more jail time due to his “extraordinary cooperation” with its crackdown on market abuse.
Prosecutors also cited Sarao’s autism diagnosis, as well as the fact that he lost the majority of his £45m gains to fraudsters.
“For the foregoing reasons, the government respectfully recommends that this court depart significantly below the advisory sentencing guidelines range,” prosecutor Michael O’Neill said.
“Specifically, the government agrees with the probation officer and the defendant that a sentence of time served would be appropriate.”
Sarao, who earned the nickname of flash crash trader, served four months in jail in London after he was first arrested for spoofing US futures markets over a five-year period. Spoofing is a form of market manipulation where traders place large bids on the market with no intention of executing the trade.
Since his guilty plea, the disgraced Brit has cooperated with US authorities, including by testifying against his former partner Jitesh Thakkar, who was charged with conspiring to spoof the market. Thakkar was ultimately acquitted.
US prosecutors also pointed to the fact that the flash crash trader still lives with his parents in Hounslow and has barely touched the money he made from the scam.
“The defendant clearly was not motivated by money, greed, or any desire for a lavish lifestyle,” O’Neill said. “His only significant purchase was a £5,000 car.”
Sarao’s lawyer Roger Burlingame said his client was “profoundly remorseful” for his crimes.
“Nav’s fate is knowing that he unthinkingly hurt innocent victims, caused enormous pain to his family, and threw his life away for, essentially, nothing — to get the high score on what was, to him, nothing more than another video game,” he said.
The final decision on Sarao’s sentencing is due to be made on 28 January.