UK trader arrested for May 2010 U.S. Stock market flash crash

Finally, they are coming to their senses.
Yep, it's likely the problem related to a data feed issue or huge mutual fund liquidations.
 
May 2010 Flashcrash was due to the Exchanges transmitting Corrupt Symbol files affecting Indices. There were two prices for the dow, S&P and other core indices due to the transmission of corrupt symbol information. These simulataneously transmitted but different index prices triggered all the BS with computers algorithmically trying to rebalance to the indices with some picking up on the lower price and others keying to the higher value.

Pull the real time - non scrubbed tapes and look at how wide and ridiculous the spread was between the two same index prices being transmitted in the message stream. Instant crescendo affect where both sides hammered the shit out of each other thinking they were getting a deal on just about anything that pegs or uses the major indices to rebalance or benchmark against.

Funny part is they continue with the fat finger witch hunt to deflect liability of the SRO's (exchanges) from a class action that would surely bankrupt them. What are the chances of the these folks who are responsible to self regulate the market having the very sophisticated market surveillance systems admit they caused the crash and volunteer to make everyone whole? Big Fat Coverup Zero!
 
I say he is still going to get 8-10 years for spoofing and his money will be either confiscated or tied up for decades...
 
Pekelo said:
I say he is still going to get 8-10 years for spoofing and his money will be either confiscated or tied up for decades...
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I don't think so....as spoofing at the time was not really a chargable offense.
Of course Nav signed an agreement with the CME not to spoof, so they can ban him and/or fine him. It'll be interesting to see what Federal authorities come up with.
 
syswizard said:
I don't think so....as spoofing at the time was not really a chargable offense.
More...

Well, eventually it was after 2010 and he was repeatedly warned about it, and he told them to kiss his ass. Now I might be wrong about the punishment for it, but just out of spite they will give him the possible harshest penalty. They are pissed at him and if the causing the flash crash charge won't stick, they are going to make sure he still gets something so they don't look like a complete fool.

I recall a Chicago spoofer got a mild punishment, a few 10Ks fine and 3 months suspension or something like that. Sarao won't be that lucky...

Edit: I have found the article, although this is a different guy:

"Coscia, who faces up to 25 years behind bars on each of multiple counts if convicted, is accused of developing an algorithm that gamed the system by placing huge "spoof" orders to buy and sell contracts for soybean meal, soybean oil, high-grade copper, gold, Euro FX and pound FX currency futures at the CME and on the London-based ICE Futures Europe exchange. "

http://www.chicagotribune.com/business/ct-spoofing-trader-trial-1025-biz-20151023-story.html

So apparently my 8-10 years guess wasn't out of line...
 
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Just to correct myself, quoting from the above link, both cases will boil down to INTENT:

"Since there is nothing illegal about canceling large numbers of orders, a routine part of high-frequency trading, the case is likely to turn on whether prosecutors can prove that emails and instructions in Coscia's algorithm prove he intended to manipulate the market, according to Trace Schmeltz, an attorney specializing in white-collar crime at law firm Barnes & Thornburg. Coscia, in turn, may try to argue that "everyone was doing it" or that the canceled orders were a legitimate tool of price discovery, said Schmeltz, who is not involved in the case."

So changing your mind too often isn't a crime, knowingly trying to manipulate the market is. The question is, what can the prosecution prove? This Coscia case will be the precedent for Sarao. Unfortunatelly, Coscia was already convicted on Nov. 3rd,:

"Possible Sentence
Coscia is scheduled to be sentenced by U.S. District Judge Harry Leinenweber on March 17, prosecutors said. The fraud counts each carry a maximum sentence of 25 years in prison and a $250,000 fine, while the spoofing charges have 10-year maximum and a $1 million fine, they said."

http://www.bloomberg.com/news/artic...r-coscia-found-guilty-in-first-spoofing-trial

Edit: I guess Coscia was the trader I reffered to in my previous post, I just didn't remember the numbers correctly. The fines were bigger than what I posted.

"In 2013, Coscia settled civil claims by the CFTC by paying a $2.8 million fine and consenting to a one-year trading ban. The judge didn’t allow prosecutors to tell jurors about the settlement."
 
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Pekelo said:
Just to correct myself, quoting from the above link, both cases will boil down to INTENT:

"Since there is nothing illegal about canceling large numbers of orders, a routine part of high-frequency trading, the case is likely to turn on whether prosecutors can prove that emails and instructions in Coscia's algorithm prove he intended to manipulate the market...
More...
Well, this will be interesting.....have they issued a subpoena for Nav's source code ?
If so, I wonder if Nav is going to give them the real code that performed the order layering ?
The latter of course would be the most damaging to his case.
 
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