on his best day, Sarao made over £3.5 million.
The story of self-taught market trader Navinder Singh Sarao is hardly talked about.
Out of his bedroom in West London, he managed to briefly trigger a £770 billion US stock market crash in May 2010.
The ‘flash crash’ lasted 36 minutes but it was enough to cause mass panic.
Sarao was arrested in 2015 for manipulating markets and in 2020, he was sentenced to a year of house arrest.
During his sentencing hearing, prosecutors urged the judge to let Sarao return home as a free man, citing his autism and his “extraordinary cooperation” in helping the government build other cases.
But US District Judge Virginia Kendall insisted that Sarao face some kind of punishment in addition to the four months he spent inside Wandsworth prison.
Sarao learned to trade in an arcade above a supermarket in 2003.
Highly intelligent, Sarao had Asperger’s Syndrome.
According to his defence team, Sarao saw beating the markets “like winning a video game”.
From his bedroom, he bought and sold S&P 500 futures, making over £30 million. However, he did not tell his family or friends because he was worried they would treat him differently.
On this index, every time an order was placed to buy or sell, “high-frequency traders” would try to make their own trades milliseconds before those orders could be executed.
Sarao’s most extravagant purchase was a secondhand Volkswagen.
When Sarao realised the high-frequency traders all used similar software, his own software took advantage of this by placing thousands of orders before quickly cancelling or changing them, once he had created artificial demand for other traders to buy or sell that asset.
Known as “spoofing”, this allowed Sarao to make legitimate buy or sell orders at a profit as the price rose or fell.
This method was very successful and on his best day, Sarao made over £3.5 million.
He could move in one direction before disappearing and picking up a quick profit, while high-frequency traders were left with nothing.
This caused the US market to fluctuate and in May 2010, he caused financial markets to briefly plummet before recovering.
Sarao was arrested at his parents’ home in 2015. He spent four months in Wandsworth Prison before being extradited to the US.
Sarao’s actions led to him being nicknamed the “Hound of Hounslow”.
In 2016, Sarao agreed to pay the US Government £9.9 million, the amount prosecutors said he earned from his illegal trading.
But it is believed he made a profit of about £31 million in five years.
Sarao pleaded guilty to one count of electronic fraud and one count of “spoofing” – which is illegal in the United States.
He initially faced 22 charges, which had a maximum sentence of 380 years.
But prosecutors decided against a jail sentence as Sarao did not spend the money on luxuries and had quickly lost his money to fraudsters.
They also took into account his autism, time in jail already served, and that he has been helpful to the government for several years since then.
Before being sentenced, Sarao said:
“I spent 36 years trying to find happiness on a path built on a lie.
“I did the things society says will give you happiness, and when they didn’t I didn’t know where to look.”
He told the judge that he had been addicted to trading but during his time in prison, he realised that trading did not have a deeper meaning for him.
Sarao added: “Money doesn’t buy you happiness. And I’m glad I know that now.”
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