On April 21, the Commodity Futures Trading Commission and the U.S. Justice Department announced a joint action against Navinder Singh Sarao, a day trader based in London, for “unlawfully manipulating” and “spoofing” the E-mini S&P 500 futures market. The CFTC and the DOJ said the alleged misconduct took place over five years and contributed to the “flash crash” in May 2010.
According to the two U.S. authorities, Sarao engaged in “exceptionally large, aggressive and persistent spoofing tactics” by using a modified version of commercially available software as well as manual entry of orders. Sarao's trading allegedly caused a “substantial imbalance” in the E-mini order book that created a “false impression” of supply and demand for the contracts.
Sarao was arrested and taken into custody in the U.K. and is currently fighting the U.S. request for extradition.
