FIND ROGUE TRADER’S ‘HIDDEN £27M’
Facing 380 years’ jail for causing £570bn US share crash, the British trader who operated from a semi in a London suburb
THE hunt is on for the £27 million allegedly pocketed by a British rogue trader accused of triggering a £570billion Wall Street crash from the suburban semi he shares with his parents.
Navinder Singh Sarao, 36 – who called the FBI’s fraud allegations ‘a bolt from the blue’ – was warned at Westminster Magistrates’ Court yesterday that he faced a 380-year prison sentence in the United States.
Sarao allegedly masterminded – from his home computer – the Wall Street ‘Flash Crash’ of 2010 in which almost a trillion dollars was wiped from global share prices. But the whereabouts of his alleged £26.7 million profit was a mystery last night.
Scotland Yard’s extradition unit arrested Sarao on Tuesday night at the request of the FBI, which claims he set up an offshore company in the Caribbean called ‘Nav Sarao Milking Markets’ and arrogantly told financial officials to ‘kiss my a***’. In West London, neighbours of the man now dubbed the ‘ Hound of Hounslow’ were puzzled by his supposed wealth, saying he lived humbly.
Even District Judge Quentin Purdy questioned the vast haul, saying: ‘ That amount could well buy a home somewhere more lush than Hounslow. So where is it?’ Prosecution barrister Aaron Watkins warned Sarao that, if convicted, he faced a ‘lengthy’ jail sentence.
Despite appearances, Sarao, who was scruffy and dishevelled in the dock, was able to offer a £5million surety to secure conditional bail. Last night he was still in custody as he tried to access the funds.
The former Brunel University student allegedly made £550,000 in five minutes on the day of the crash in May 2010 when £570billion ($850billion) was wiped from the value of the world’s biggest companies. It was the biggest one-day collapse in Wall Street history and sent New York traders into a frenzy.
Sarao allegedly used computer programmes to create fake transactions on the Chicago Mercantile Exchange (CME) – all from his three-bedroom home in Hounslow, where yesterday the curtains were drawn and a battered Vauxhall Corsa was parked outside. His father Nachhattar Singh Sarao reportedly vowed: ‘We will fight the claims – it’s all a set-up.’
Friends described Sarao as a ‘normal’ man with a ‘Cockney accent’. One neighbour of the family’s three- bedroom £350,000 semi, Harmesh Singh Johal, 55, said: ‘ They were a very nice family. We’ve lived next door to them for about 25 years. They are a religious family. They weren’t a flash family showing off with a Mercedes or anything like that. Navinder didn’t have a car.’
Mr Watkins said he faced 22 charges in the US, with possible prison sentences ranging from five to 25 years on each count, which could total 380 years. Sarao bit his lip nervously during the proceedings and tugged on his sweatshirt as the charges were read out. Asked if he consented to being extradited to the US, he replied: ‘No.’ An extradition hearing is expected to take place later this year.
Joel Smith, defending, said: ‘This matter has come as something of a bolt from the blue for Mr Sarao.’
The US government opposed Sarao’s release on bail in case he fled, but Mr Smith described him as a man of ‘impeccable’ character with no previous convictions who lived with his parents.
The judge granted him conditional bail on a £ 5,050,000 surety, which included £30,000 offered by Sarao’s retired father and £10,000 each from his two brothers. The £5million remainder came from one of Sarao’s trading accounts – although the court heard £4.7million of this was a loan.
Addressing bail conditions, the judge said Sarao’s computer use had ‘clearly upset the Americans, to put it mildly’, and ordered him not to use the internet. Sarao must live at his home address with his parents and wear an electronic tag monitoring a curfew from 11pm to 4am. He must surrender his passport and the passports of his parents, report to a police station three times a week, and not leave England or Wales.
Bailing the trader, Judge Purdy said: ‘I suspect the last 24 hours have been somewhat traumatic for you. Whatever the position was before, you are now aware the US government seeks your extradition. You face very serious charges.’
Sarao is accused of making £26.7 million from illegal trades over five years and an investigation team involving six agencies in the US and Britain want him put on trial in New York.
He allegedly used automated trading software to ‘spoof’ the market by placing up to 19,000 orders and then cancelling them, all in under one second.
Representing the Judicial Authority of the United States of America, Mr Watkins said: ‘It is said he was asked to desist his conduct by the US authorities but continued to do so knowing it was wrong.
‘With that outlook, the sentence is likely to be high.’
Nick Leeson, the rogue trader who brought down Barings Bank in the 1990s, said yesterday Sarao might be being used as a scapegoat by the US authorities. He told LBC Radio: ‘The story doesn’t entirely ring true for me. I hate to jump to conclusions, but is he a scapegoat? It’s just very difficult to see how somebody so small has done something so big.’
‘A bolt from the blue’