Navinder Sarao

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Navinder Sarao
Occupation Owner
Employer Nav Sarao Futures Limited
Location London

Navinder Singh Sarao is a London-based trader who was arrested on April 21, 2015 on charges his firm, Nav Sarao Futures Limited PLC, contributed to the May 2010 "Flash Crash" in which the Dow Jones Industrial Average fell 600 points in five minutes. UK authorities charged him with wire fraud, manipulation and commodities fraud, using illegal trading strategies such as spoofing.[1] He was also charged by the U.S. Commodity Futures Trading Commission with unlawfully manipulating, attempting to manipulate, and spoofing in the E-mini S&P 500 futures contracts.[2] [3] [4]

The CFTC said its investigation revealed that he had profited substantially through this manipulation, which took place on the CME Group's Globex electronic trading system.

The CFTC alleged that Sarao's scheme produced an estimated $40 million in profits for Sarao and his company from 2010 to 2014. U.S. authorities obtained court authorization to freeze Sarao's accounts, $7 million in assets so far, according to the CFTC. The allegations against him differed from a 2010 CFTC and Securities and Exchange Commission report that concluded the Flash Crash was triggered by a massive computer-driven sell program initiated by a mutual fund company.[5]

He spent four months in a London jail.[6]

In January of 2016, it was reported that a draft of a new study citing work from a group of economic, legal and astrophysics experts in California analyzing the Flash Crash suggested that it was “highly unlikely” that Navinder Sarao’s spoofing orders, even if illegal, could have caused the Crash.[7]

In November of 2016 Sarao was extradited to the U.S. and pleaded guilty in a Chicago federal court to spoofing and wire fraud. He agreed to forfeit $12.9 million in ill-earned gains from his trades. [8]

In April 2019 Sarao returned to the Dirksen Federal Courthouse in Chicago to testify against Jitesh Thakkar, the software executive from Naperville accused of helping Sarao commit his crimes. His testimony could potentially help to reduce his prison sentence.[9]

In January 2020, the U.S. government said Sarao should not serve any further time in jail, recommending only time served, owing to his “extraordinary cooperation” with the government. In making its recommendation, the government said Sarao wasn’t motivated by money or greed, and that his autism diagnosis should be taken into account.[10]


According to the CFTC complaint (see below section), beginning in June 2009, Sarao started manipulating the CME Group E-mini S&P 500 futures market by placing large volume orders at different price points, thus creating a false appearance of substantial supply, and then modifying and cancelling the orders before they could be executed. This induced others in the market to react to the deceptive practice and artificially depressed contract prices. He then profited by executing other, real orders.

The CFTC backed up this claim with email evidence from June 12, 2009 that allegedly indicated that Sarao had asked his FCM for help in contacting the independent software vendor he used to trade futures. In the email, Sarao looked to the ISV for help modifying a trading function called "cancel if close", which cancels an order if the markets gets close to his price.

The complaint alleged that Sarao worked with the ISV to design "functions on his automated trading software that would allow him to simultaneously place numerous orders at different price points and automatically cancel those orders as the market approached them and before they could be executed." Sarao allegedly then implemented the layering strategy of "placing, repeatedly modifying, and ultimately canceling multiple 200-, 250-, 300-, 400-, 500-, 550-, 600-, and 900-lot sell orders." (The complaint said its research showed the average market size order was just 7 lots.)

The CFTC alleged that Sarao's layering technique "exerted downward pressure on the market." Sarao then exploited his own manipulative activity by repeatedly selling futures contracts only to buy them back at a slightly lower price. When he stopped layering and the markets moved back upward, he used the opposite strategy, repeatedly buying contracts and then selling them at a slightly higher price.

The CFTC's investigation looked at almost 400 days of trading activity by Sarao from April 2010 and April 2014. During that time, Sarao allegedly used the dynamic layering technique on 63 percent of those days. The CFTC said he also used a spoofing technique that placed 188-lot, and 289-lot orders on the sell side of the market and cancelled them before the orders could be executed. The agency also noted that Sarao used another trading technique where he "flashed" a large 2,000-lot order on one side of the market, executed an order on the other side of the market and then cancelled the 2,000-lot order before it could be executed. This technique and others gave market participants a false sense of volume and liquidity in the market, and artificially move the E-mini market, the complaint said.

The CFTC complaint said that investigators asked Sarao about his trading activity and that he admitted cancelling large volumes of orders, but claimed that he did so manually, rather than using an automated trading program. He called himself an "old school point and click prop trader."

Court documents showed that Sarao did business with MF Global, Marex, Knight Futures and R.J. O'Brien. A spokeswoman for R.J. O'Brien said the company "had no involvement in the trading decisions" made by Sarao or his company, and that they did not do any business with him during or for several years after the Flash Crash.[11] The documents also contained emails from Sarao to the software companies Trading Technologies and Edge Financial with instructions for customizing software for his trading needs - including functions that would cancel his orders if the market moved close to where his orders were resting.[12]

After leaving Brunel University, Sarao started his career with a back office job at a bank and then joined a graduate trainee program at Futex, a proprietary trading shop in Woking, Surrey. He was working there during the 2008 financial crisis. [13]

Flash Crash

The CFTC alleged that on May 6, 2010, the day of the so-called Flash Crash, Sarao was active in the E-Mini S&P market on the CME Group. The agency alleged that Sarao's use of the dynamic layering technique contributed to an order book imbalance between buy-side and sell-side orders. It also claimed that he used the layering technique continuously from 11:17 am to 1:40 p.m. on May 6, 2010, as well as using the spoofing technique between 12:33 p.m. and 1:45 p.m. This created downward pressure on prices in the market, especially given the sizes of orders he was placing. The CFTC said that Sarao made $879,018 in net profits in the E-minis that day and made more than $40 million between 2010 and 2014.

The agency also alleged that he used the strategies on several days in 2010 and into April 2014.

Authorities also said that Sarao created a company in the Caribbean island of Nevis called Nav Sarao Milking Markets.


John Lothian News Articles[edit]

Data Day in the case of U.S. v. Jitesh Thakkar

In an abbreviated third trial day, the U.S. Department of Justice rested its case against Jitesh Thakkar and Edge Financial Technologies. Thakkar is on trial for allegedly facilitating the criminally fraudulent spoofing trading of Navinder Sarao, who pleaded guilty to two criminal counts related to his spoofing of E-mini S&P futures in the first half of this decade.  

Read More

US v Thakkar: “MasterChief” Day

The second day in US v Jitesh Thakkar and Edge Financial Technology began Tuesday morning with defense attorney Renato Mariotti’s cross examination of Navinder Sarao, the prosecution’s headline witness. Sarao, a cooperating witness, is awaiting sentencing for convictions on two criminal charges in a separate case, which could include up to 30 years jail time. The government is waiting to see how cooperative (effective?) Sarao turns out to be as a supporting player on Team USA and will condition his sentencing recommendations on his cooperation. Finishing up a few hours of cross examination, Mariotti struggled a bit to flesh out Sarao’s role as the mastermind. Sarao, for his part, struggled not to show impatience with the tedium of these proceedings that are so important for him and his prospects for freedom. Thakkar, the defendant, took notes and looked on.

Read More

US v. Jitesh Thakkar: An Exercise in Justice

April 1, 2019 was the first day in the criminal trial U.S. v Thakkar, in which the government charges that Jitesh Thakkar aided and abetted spoofing in a manipulative and deceptive scheme carried out by another person. It is a serious allegation and everyone is taking it seriously. There are four prosecuting and three defending attorneys. If things run as scheduled, yesterday was just the first of a half-dozen or so days of testimony and arguments as the Federal Government endeavors to right the wrongs allegedly perpetrated by Jitesh Thakkar, president of Edge Financial Technologies, a software development firm that programs applications for the trading industry.

Read More


Sarao attending Brunel University in west London.[14]


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