Trader accused of high-speed trading to make millions in 'illicit profits'

debitspread said:
Why is asking him to come clean as to the disposition of his criminal proceeds "unjust" (to use another poster's term)?
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I walk around the mall the other day and pick-up $100 in change and "lost" dollar bills.
A security guard spots me doing this on camera, calls the cops, and I am picked-up at my house and I go to jail.
Now they want to know where the criminal proceeds are located ?
Same situation. We're they really illegally obtained ?
 
debitspread said:
FTA: He said Sarao would need to disclose the whereabouts of $40 million of "illegal profits"... before the bail surety could be lowered.

Why is asking him to come clean as to the disposition of his criminal proceeds "unjust" (to use another poster's term)?
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the US govt is assuming he made $40 million, but they don't know where it is. They want him to pay the bail because in doing so it will reveal the whereabouts of the money. the reality is of course that he didn't make anything like that, the $5 million or so in the Rj obrien acct is probably all of it and since that money is frozen by the US govt, he cant access it and is therefore doomed to spend the year in jail. this is why it is unjust.
 
Visaria said:
the US govt is assuming he made $40 million, but they don't know where it is. They want him to pay the bail because in doing so it will reveal the whereabouts of the money. the reality is of course that he didn't make anything like that, the $5 million or so in the Rj obrien acct is probably all of it and since that money is frozen by the US govt, he cant access it and is therefore doomed to spend the year in jail. this is why it is unjust.
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Just or unjust, he'd do himself a favor by puking up the details of his offshore entities. He's poked the govt in the eye twice, once with his "kiss my axx," and once with his tax-dodge shell games. "Contempt of cop," twice over.
 
Visaria said:
but there aren't any tax related charges, so i have to assume that he has done nothing wrong from a tax perspective.
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Oh, he most certainly owes taxes as most of the expenses claimed to offset the huge income were likely not related to the business of trading. I think I read that in one year with 7 million in revenue, he claimed a net loss profit-wise on his trading company's tax return. Now that's ridiculous. What could he have deducted other than software/hardware, and trading fees ?
 
what constitutes high frequency trading in this situation? If he's trading out of his home in Florida, he most likely doesn't have access to super computers; one would expect he would be executing his trades on supercomputers to take advantage of the quick change in prices.
 
naija said:
what constitutes high frequency trading in this situation? If he's trading out of his home in Florida, he most likely doesn't have access to super computers; one would expect he would be executing his trades on supercomputers to take advantage of the quick change in prices.
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First of all, he was trading from outside of London, England. Secondly, he did trade from a fast computer that was collocated near a high speed communication trunk. He simply made a remote connection to that computer from his parent's home.
Finally, he didn't trade with tremendous frequency (i.e. 10x per minute), but he did trade with size. He was smart enough to know that if he traded with high frequency, his chances of getting "caught" were much higher. So instead, he would just "pick his spots".
Oh, and how he finally got caught is somewhat of a mystery...someone likely tattled on him and that sparked a special investigation into the flash crash and that independent forensic auditor discovered his trades....and all of those layered "cancels". That led to more investigation of his trades on "normal" days. The final "kicker" is that he lied to the CME about not using spoofing methods in a programmed fashion. That's when the Feds got mad.....
 
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