‘Hound of Hounslow’ is no Wall Street wolf
The ‘vulnerable’ man tried by the US over a $1tr crash wants his quiet life back. Cara Mcgoogan reports
The story of how Navinder Sarao came to be known as the “Hound of Hounslow”, in an ironic reference to the famous Wolf of Wall Street fraudster, begins and ends in his childhood bedroom.
The notorious stock market trader – who amassed a fortune of £45 million, before being arrested for his part in the 2010 “flash crash” that panicked the US stock market, temporarily wiping almost $1trillion from its value in minutes – could have been starting a life sentence in a US prison this weekend.
Instead, Sarao’s five-year legal battle, which has taken him from HMP Wandsworth to the dock of a Chicago court, has landed him back in the west London home where he has lived since he was three.
The 41-year-old, who pleaded guilty to two out of 22 charges of wire fraud and market “spoofing” in 2016, was finally sentenced on Tuesday to one year of home confinement. He will spend it in the darkened room that contains his computer, Xbox and a bed covered with stuffed toys.
“It’s a gigantic relief,” says his lawyer Roger Burlingame. “The sentence he got, given the crime he pleaded guilty to, is extraordinary. He isn’t the criminal mastermind you might think, looking at it from afar.”
In fact, he is a vulnerable adult with severe Asperger’s, only diagnosed after his arrest, in his 30s. For anyone who has met Sarao, says his lawyer, it is “bonk-you-on-the-head obvious” that he is “childlike, naive, trusting, innocent, friendly and gentle”.
The youngest of three boys, Sarao has lived with his Sikh parents, Nachhattar and Gurpreet, 73 and 65, all his life. Their description of him is a charming mathematical genius who mastered his times tables aged three, before going on to become one of the top 700 Fifa video game players.
But for all his astounding intellect, he struggled to live independently. Though he was never assessed for autism spectrum disorder as a child, it seemed natural for Sarao to stay with his parents into adulthood. “It would be dangerous to persuade him [otherwise],” said Jasvinder, his brother, in a letter to the court. “I currently have two children, and when, inevitably,
Nobody in his family had any idea he had made anything like the money he did
my parents pass on, I will have three.” When Burlingame describes his client, over the phone from New York, it is with unexpected warmth from a lawyer. One photo of Sarao, as a beaming youngster posing alongside his football team, sums him up perfectly, as he says: “This joyful, sweet guy.” Sarao studied computer science at Brunel University, where he first picked up trading. “He talks about it as his dream job,” says Prof Simon Baron-cohen, who diagnosed Sarao with severe Asperger’s while he was awaiting bail in HMP Wandsworth. “It was more like a hobby for him. He had exceptional skills in rapid pattern recognition, but he was obsessed.”
Sarao would forego sleep for two days in order not to miss a minute on the stock market, or wake at 3am to start work while it was dark and quiet – optimum conditions given his hypersensitivity to sensory information.
“He set himself very high expectations and then he would keep going and couldn’t quit,” says Prof Baron-cohen. “Even if he’d made $1million in a day, he might get upset because he could have made more.” It wasn’t material gain that drove him, but a desire to “keep getting a better score. It was like a computer game to him. Except it wasn’t a game, it was the real world stock market”.
Sarao’s proficiency led him to discover traders who were “spoofing” the market – prompting it to move dramatically in one direction, then buying or selling stock while the price was low or high, respectively. After repeated futile efforts to report the activity to the regulator, he decided that it must be allowed within the rules of the game. Soon enough, his trading account had ticked up to £45million.
“Nobody in his family had any idea he had made anything like the money he did,” says Burlingame. In part, this was because of his modest lifestyle. At his wealthiest, he bought a £5,000 secondhand Volkswagen but abandoned it because he found driving too stressful, and went back to his bike.
So it was a shock when, in the early hours of April 2015, the Met Police arrived on the Sarao family’s doorstep to arrest him on allegations of fraud and market manipulation. Sarao didn’t realise he had committed a crime
(he was only the second person to be arrested for spoofing), while his parents were oblivious to the fortune their son had accrued. The US demanded he be extradited to face 22 charges of fraud and market manipulation. If found guilty, he faced a 380-year jail sentence. “Nav’s family were terrified,” says Burlingame. “The [US] justice department puts people away with sentences that dwarf those in the UK.”
The UK has blocked the extradition of other British citizens with Asperger’s to the US. In 2010, Theresa May intervened in the case of alleged hacker
Gary Mckinnon, who was wanted for breaking into Nasa’s computer systems in search of evidence of UFOS. Eight years later, the Court of Appeal prevented the extradition of Lauri Love, who allegedly hacked the US military. But in November 2016, Sarao was flown to the US to face charges, despite Prof Baroncohen’s assessment that he was a serious suicide risk. The four months he had spent behind bars in the UK had been already “torture” due to his Asperger’s, says Burlingame, but “the Metropolitan Correction Centre in Chicago makes HMP Wandsworth look like a spa”. Still, “when Nav got on the plane, he immediately befriended the [FBI] agents, and the prosecutors fell in love with him.”
Sarao agreed to turn whistleblower and help the US crack down on the crime he was accused of, then rife within the markets, by explaining how it worked. He pleaded guilty to two of the charges and was granted bail to return to the UK while awaiting sentencing. “He educated them about a whole area of criminal activity they couldn’t see,” says Burlingame. “You have to have this preposterous ability with pattern recognition to see it, and Nav has savantism – he can look at a screen and see stories playing out.”
Sarao has since assisted in upwards of a dozen criminal cases in the US.
In a twist, Sarao had lost all his fortune before his arrest – having been conned by scammers. He journeyed to Chicago alone this week for sentencing. His parents couldn’t afford the flight. Burlingame said: “It was an enormous relief when the judge announced the sentence wouldn’t involve jail time.”
After less than 36 hours in the US, Sarao was back on a plane to Hounslow. He is so eager to return to a quiet life.