'Flash-Crash’ Trader Faces End of Road in U.K. Extradition Fight

Written by John D'Antona | Oct 12, 2016 1:11:58 PM

(this article first appeared on Bloomberg)

Navinder Singh Sarao hasn’t ventured outside London for more than a year due to bail restrictions imposed after his arrest for spoofing markets. That could all change should his final appeal fail Friday, forcing his extradition to stand trial in the U.S.

The 37-year-old will appear in a London court for his last chance to fight a ruling forcing him to be extradited. If the request is declined, Sarao could be on his way to the U.S. within 28 days.

Sarao has been fighting extradition since April 2015 when he was arrested at the behest of American prosecutors at his home in Hounslow, London. The trader is accused by the U.S. of spoofing CME Group Inc.’s stock futures market over four years, including on May 6, 2010, when a trading frenzy created a flash that briefly wiped almost $1 trillion from the value of American equities. He allegedly made as much as $40 million in profits overall and faces 22 counts of fraud and market manipulation.

His case captured public imagination as people struggled to understand how a lone day trader who lived with his parents and often worked from his bedroom could have made so much money. He spent four months in prison last year as he tried to secure bail, eventually winning his release by disclosing he had about 25 million pounds ($31 million) of assets in Switzerland.

Unfortunately for Sarao, English laws were changed in April 2015 removing an automatic right to an appeal for extraditions. All extraditions must now be granted permission to appeal via a written application. If unsuccessful, the request can be renewed orally. Sarao’s written request was turned down in July.

“With one foot already on the plane to the U.S. having had his extradition ordered and application for leave to appeal refused on paper, this is Sarao’s last opportunity to persuade the High Court,” said Edward Grange, a London lawyer at Corker Binning, who isn’t involved in the case. “If the renewed application for leave to appeal is refused, Sarao will have come to the end of the road.”

A lawyer for Sarao declined to comment. Spoofing involves placing orders with no intent to execute them to fool other traders into buying or selling to manipulate prices.

Sarao’s lawyers have sought to undermine the U.S. case over the last 18 months by arguing his actions weren’t a crime in the U.K. and, as a British citizen, any trial should take place in England. The prosecution has countered that while Sarao was in the U.K., most of the damage was on an American trading platform, and the U.K. Financial Conduct Authority didn’t pursue charges after conducting its own investigation, leaving no option for an English trial.

In the ruling against Sarao, handed down by a lower court in March, Judge Quentin Purdy acknowledged there’s no known U.K. prosecution for spoofing, but agreed with the U.S. that this didn’t mean the behavior wasn’t a criminal offense under English law.

Sarao has only spoken once publicly since his arrest, shouting out from the dock at a court hearing in May 2015: “I’ve not done anything wrong apart from being good at my job.”

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