The Wall Street ‘flash crash’ that occurred in 2010 resulted in billions being struck from the value of shares in the US within a matter of minutes. Navinder Singh Sarao, has now been arrested in the UK and the US Department of Justice want him extradited.
The charges that have been brought against him are of wire fraud, commodities fraud and market manipulation. It is alleged that he manipulated share prices by using automated computer programmes. There is another claim that has been filed against the financial trader by US regulators who stated that he cleared $40m in a 5 year period. This is thought to have been happening as lately as the 6 April. Mr Sarao will have an extradition hearing at Westminster Magistrates’ Court today (Wednesday 22nd April).
At the time of the crash, markets were falling quickly before recovering at the same rate. This was put down to high-frequency traders placing multiple sell orders. This is where people who deal in shares create algorithms that allow them to buy and sell stocks in a matter of milliseconds.