Accused British 'flash crash' trader fights extradition to U.S.
By Michael Holden, Tom Polansek and Karl Plume
LONDON/CHICAGO (Reuters) - A British man accused of market manipulation that contributed to the May 2010 Wall Street "flash crash" said he opposed being extradited to the United States, while the operator of the market where he traded sought to rebut prosecutors' suggestion that futures helped cause the crash.
Bail for Navinder Singh Sarao, 36, was set at 5 million pounds ($7.5 million), along with other conditions. He will remain jailed in London for at least one more night, until he raises the bail.
Sarao's bail hearing was his first appearance since the U.S. Justice Department charged him with wire fraud, commodities fraud and market manipulation over a period of several years.
"This has come as a bolt from the blue for Mr. Sarao," his lawyer Joel Smith told the court.
Sarao is accused of using an automated program to "spoof" markets by generating large sell orders that pushed down prices. He then canceled those trades and bought the contracts at the lower prices, reaping a roughly $40 million profit on his trading, U.S. authorities said.
The flash crash saw the Dow Jones Industrial Average briefly plunge more than 1,000 points on May 6, 2010, temporarily wiping out nearly $1 trillion in market value.
In its complaint, the Department of Justice said Sarao's activities "contributed to the order book imbalance" that was a factor in the flash crash.
CME Group Inc, where Sarao conducted his trades, said on Wednesday in a statement that "the Flash Crash was not caused by the futures market." The exchange added that it was prohibited by law from releasing any information about his trading as well. Continued...