Autistic futures trader who triggered flash crash spared prison
abcnews.go.com
abcnews.go.com
Interestingly, he also lost his entire $50 million fortune to a bunch of terrible investments, including some downright frauds.
Related article (goes into details about how he lost his money): https://www.livemint.com/Money/TYUUtwYOj0VIPhFFyLICQM/How-fl...
https://www.sec.gov/news/studies/2010/marketevents-report.pd...
He caused the market to tank by billions of value but he only made $900k.
It is not like billions of dollars of value are destroyed when investors sell stock. It sounds like the market had a crash as they tend to sometimes do and in this case the authorities decided it was this guy who did it! I think that analysis is quite tenuous. Anyone who sold stock participated in the crash. It seems nuts to try to assign blame.
Perhaps those that sold at a lower price purchased another stock also at a lower price and there is an assumption the universe will balance it out. But stocks drop at different % some institutions may choose to move to cash or another commodity temporarily. I don’t expect it’s a zero sum
That is what I know, am I missing something ?
I can understand the exchange rolling back half an hour of trading or whatever and calling it a wash. The idea that a trader is somehow liable for something seems absurd. Only thing he is guilty of is annoying powerful people.
https://www.margaretthatcher.org/document/106145
Having protections in place to guard against market manipulation is a facet of this policy where all citizens are now traders (and not just a select group of well educated, well steeled stock market professionals.)
I don’t defend this policy, but I see why the former leads to the latter.
Another good reason to enforce a level playing field in capital markets comes about from another backbone of the 80s and 90s: placing national infrastructure like power, water, and pensions in the hands of private companies traded on the stock market, who need some form of protection on their share price.
I expect it will be quite difficult to defend that position. The value of a company to its owners is more or less its expected earning potential. That is to say, low share prices in and of themselves don't necessarily cause bad outcomes for the shareholders in the long term and have no impact at all on the prospects of a company. There is no reason to protect something that isn't important. If anything, the very high returns vs share price should drive additional investment in the sector, although the link there is a bit tenuous and speculative if market manipulation is involved.
Personally I don't see a problem investors are forced to - crazy as it may seem - buy things because they want to own them for the long term.
I'm a normal citizen who holds shares. I remember I got an email alert when the flash crash happened, had a minor heart attack, and then reminded myself that I'm investing for the long term and it doesn't matter what the market does on any one particular day. In that case, it wasn't even a whole day before my portfolio had recovered.
Markets need to be fair and transparent, but you can't save people who panic-sell in a crash.
This is like saying "because chainsaws are available everywhere to use without a license, we must make juggling them safe for all ages".
Well, ok, maybe we should forbid market orders to retail investors. Or make it a special privilege that you have to be approved for like margin and options.
It's possibly a foreign relations issue if the winners or losers are heavily biased towards one country or another. Like if all the winners were Russian and the losers were American
I also don't have a definitive answer however some things that play into the equation must be:
I think VWAP (Volume-weighted average price) also plays into how much money was made by people and how much was lost in aggregate. This specific share we are tracking along its lifetime might have exchanged hands a lot while it is going up and traded rarely during periods of decline.
Also the share could have been first purchased as a part of the options given to investors, employees, etc.
Anyone who bought it, just as much. Heck, anyone who didn't buy it, as well. If more people had bought quicker, the price couldn't have declined, could it?
You just blew my mind there. Of course!
https://www.businessinsider.com/emails-sent-by-trader-navind...
Per the official criminal complaint document:
Around the time of the Flash Crash, SARAO took significant steps to protect his assets. In late April 2010, SARAO established a new entity, Nav Sarao Milking Markets Limited, which was incorporated in Nevis. SARAO appears to have created this company as part of a tax avoidance strategy pursuant to which he also established, in 2012, International Guarantee Corporation, incorporated in Anguilla.[1]
[1] https://www.justice.gov/sites/default/files/opa/press-releas...
Yeah that is 100% lawyer speak haha. Smart move tbqh.
This fits with the description of getting more points. After he got the points, he wanted to keep more of them, so he figured out a way to do that.
The futures exchange wrote to Sarao on the day of the flash crash, telling him to stop spoofing, and he called them back "and told em to kiss my ass."
https://www.bloomberg.com/opinion/articles/2015-04-21/guy-tr...
https://www.bloomberg.com/opinion/articles/2020-01-15/it-s-n...
https://www.bloomberg.com/opinion/articles/2020-01-29/goldma...
Given he lives in England why was he extradited to the US? Is the summary that US has enough political power to have anyone who breaks US law wherever they are situated extradited and tried here?
The treaty is reciprocal. The UK has an equivalent right with respect to people in the US who committed a crime in the UK who meet a probable cause test. An independent review concluded that the two tests used in the two countries are worded differently but effectively equivalent.
My information is from https://uk.usembassy.gov/our-relationship/policy-history/the.... Check the section on why it is easier to extradite in one direction versus the other. (Which hasn't yet been updated to include this refusal.)
The internet has made global crimes interesting, that's for sure. I would have thought the crime would have to be prosecuted in the criminal's home country given that's where he was doing the work from.
The law wants, amongst other things, justice for victims. So when your victims are in some country, expect to be tried there.
https://securityboulevard.com/2018/04/do-cybercriminals-ever...
Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level. In other words, you just need to do something impossible. Surely that shouldn't be a problem should it?
Extradition usually requires it to be a crime in both countries. Ironically, due to obscenity laws, it might actually be possible to do it over porn in some edge cases.
>Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level.
Unfortunately, this isn't even new. The case of Kim Dotcom shows just how ridiculously far US "law enforcement" can go at the behest of organizations such as MPAA/RIAA.
I don’t know why this was downvoted. Recent events have proved that if the victim is a British motorcyclist, for example, extradition does not apply.
https://www.bbc.co.uk/news/uk-england-northamptonshire-51228...
I think the immunity was eventually deemed not to apply (or at least to be questionable) but even if not there was precedent of a Briton's immunity being waived for extradition to America; a favour not repaid in this case.
So yes, 'political power' indeed.
This scares me a great deal. Totally bonkers totalitarianism from a rogue state.
Take elections as an example. Our 2016 elections were apparently never hacked, but there's a lot of conversation going on right now about "Russian Interference" but we're not specifically arresting Russians are we?
So what makes it OK for someone in a country we don't have extradition treaties with to just let them off the hook vs a country we do?
In other words, the world is TOTALLY BONKERS.
I mean specifically, am I breaking a law in the next sentence in China and should be arrested and put in a prison camp in CHINA for this: So this happened: https://en.wikipedia.org/wiki/1989_Tiananmen_Square_protests
It normally happens when they go somewhere warm for a vacation.
And some countries, Israel for example, have actually sent assets to other countries to flat out kidnap and smuggle them out. The (probably) most high profile example of this being the abduction, confinement, and smuggling of Adolf Eichmann by Shin Bet and Mossad personnel. There are films about this, one being Operation Finale.
Other countries have done this to varying levels, including the United States. Some can be found starting at this point in the extraordinary rendition wiki entry https://en.wikipedia.org/wiki/Extraordinary_rendition#Histor...
Oh wait, actually they were "punished" by being bailed out with billions of public dollars.
Well its all fun and games until the next revolution...
How can a single person with an internet connection (that's my understanding of the 'from his parents home' part) trigger an event that causes US markets to crash and wipe (albeit temporarily) billions of dollars?
I mean, this guy was 'only' in it for the money. Could someone with much worse motives just trigger a crash like this on demand?
I have, at a given timestamp, a queue of orders that must be fulfilled in accordance with a strict set of rules.
By playing the rules and advertising bids with a lowlatency connection fast enough to impact the bid price, whilst canceling and not fulfilling that order, say 250us later. You can make a position to take advantage of that artificial price move that you caused.
This is called spoofing.
But the article says that Sarao did this from his parent's house. Would a residential internet connection be sufficient to perform such spoofing?
The way you describe it, spoofing sounds like an easy way to make money, as long as you have enough capital and a fast internet connection, like with arbitrage. But there must be some limitation to this, right? Could anyone (like me) do spoofing and cause a flash crash?
The idea is you take a previous trading intraday execution data set, profile out volume per second, execution prices, etc. Then encode a proprietary datascience backed decision tree for dispatching buy sell messages.
No human in theol loop.
Let's imagine the typical US villain, Russia, North Korea, blah, blah. Let's say they have a few of their folks figure out weaknesses in the trading system then trade and then trigger a bunch of flash crashes everyday for a week or more. What will that do the market? How much billions would be lost?
The irony is that he had millions in assets in the first place. Lol.
(A child can pull the trigger that kills the person, but maybe he was told that pulling the trigger will make the person laugh...or whatever.)
I mean his lawyer argued that but his lawyer is trying to exploit people like yourself.
I can speak to that subject without being a doctor. A doctor also in all honesty would almost certainly have less expertise in the subject than myself unless they were psychologists or similar.
I feel compelled to speak on the subject because the general attitude that autistic people are fundamentally amoral, fundamentally incapable of knowing right from wrong leads to stigma and mistreatment while not actually being true. The very idea that you have to consult a doctor to judge if an autistic person, not the highest functioning but far from the lowest, is capable of moral reasoning is an idea that leads to stigma and "othering" and exclusion and dehumanization. If I come off as aggressive it's because I see your beliefs as personally threatening.
It's kind of a sensational thing to add to a headline, but that's how headlines have always worked.
He earned 900k on that day. It doesn’t seem plausible.
I would say in spite of that that this is one of those rare cases where the justice system comes back with a fair sentence.
It seems to be becoming the new "depression" in leniency arguments hitting the headlines, at least for tech related miscreants.
>> His lawyers said the time Sarao spent in jail in Britain was "unbearable" because of his autism, saying it amounted to "a torture of sensory stimulation, sleep deprivation and forced socialization," and that he became suicidal. They said they were concerned that Sarao may not be able to survive another stint behind bars.
His autism is clearly not on the mild side of the spectrum. He lives at home with his mom even as an adult and rarely leaves his room.
The courts are entirely capable of understanding this context, compared to say someone with a mild form of autism who can still be functionally social in forced situations. Not to mention when considering intent and motivation behind the crime (which a severe case of autism can no doubt play a role) during sentencing plus their willingness to accept fault.
But ultimately this person also returned $12M in funds me made from the loophole, was a first time offender with a stable future, and helped them catch other nefarious traders. So even without the autism stuff he had a very good argument against any prison time.
The idea that a mental deviation from the norm being used to explain someone's deviation from the norm is some sort of convenient excuse as you seem to imply doesn't lead to a fair society for everyone, just one where everyone who does not deviate gets to sit on a nice cushy throne while taking from the people who do.
Of course, that might be a misconception on my part, but I see it quoted a lot in news coverage of cases as a mitigating factor.
Misuse and abuse of it will just undermine the cases of and support for genuine sufferers.