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

[Pekelo]

I understand you didn't get the analogy, because...

Sarao is an exceptional trader

Excuse me, but spoofing isn't really trading, that is cheating. Yes, he was an exceptional cheater, but we would like to see his track record without spoofing to make such a claim.

Now I saw someone claiming that people who saw him before the algo running, he was already profitable. Of course the question arises, why do the spoofing at all?

The stories a little contradictory about him by the way. Generally they say he was in and out of the market, then there is one story of his huge position that was left on overnight. His general approach and this story are contradictory...

--------------------------------

Anyhow, there are 3 different legal issues messed up as one:

1. Did he cause the crash? Well, he actually turned off the algo just before the crash, so the argument has to be that NOT running the algo caused it. Anyhow they won't be able to prove it, so verdict: INNOCENT

2. Did he spoof? Yes, and that being also illegal, verdict: GUILTY

3. Did he avoid UK taxes? Common sense tells me you have to pay more taxes on 40 million bucks gains than what he did, so verdict: GUILTY

To me the interesting part is that the UK government isn't even interested in the tax issue. Now once the US is done with him, there will be no money left for the UK treasury to get their hands on...

 

[syswizard]

Excuse me, but spoofing isn't really trading, that is cheating. Yes, he was an exceptional cheater, but we would like to see his track record without spoofing to make such a claim.Anyhow, there are 3 different legal issues messed up as one:

1. Did he cause the crash? Well, he actually turned off the algo just before the crash, so the argument has to be that NOT running the algo caused it. Anyhow they won't be able to prove it, so verdict: INNOCENT

2. Did he spoof? Yes, and that being also illegal, verdict: GUILTY

3. Did he avoid UK taxes? Common sense tells me you have to pay more taxes on 40 million bucks gains than what he did, so verdict: GUILTY

To me the interesting part is that the UK government isn't even interested in the tax issue. Now once the US is done with him, there will be no money left for the UK treasury to get their hands on...

Good synopsis Pek....well done.

 

[i960]

I wouldn't be certain of that. Spoofing is like lying.....and you know a liar can be telling the truth once in a while. Tough to distinguish between a spoof order and a real order IMHO.

The vast majority of size orders are done beneath the surface. They aren't just advertised to the market so blatantly. It's quite easy to spot spoofing - the question is, why are the algos so stupid about doing it?

It's that latter part that even enables spoofing to be successful. If algos don't react because they know it's BS, then spoofing stops because a state of stalemate has been reached.

 

[Pekelo]

I got curious about the tax issue and after googling it:

". Sarao will have to pay 2.5 million pounds from the Swiss assets to the court once the money becomes available."

http://www.chicagobusiness.com/arti...n-cme-flash-crash-set-for-release-from-prison

That is still only 10% taxes although the UK doesn't tax spread betting. Interesting conversation on that very subject:

http://www.elitetrader.com/et/index.php?threads/uk-taxation-for-futures-and-options-trading.290262/

" any profit and loss that I will generate will be treated as capital gain (so not as income) thus calling for CGT (18% for base or 28% for higher tax payer). "

It seems to me that Sarao's 10% is still too low...

 

[syswizard]

It seems to me that Sarao's 10% is still too low...

Agreed....that's deal of the century....wow !!

 

[running_bare]

LOL @ ETard aspie, dipshits

Give it a rest, you're clueless, pizza delivery boy

1/ GBP 2.5 MM is the bail money, not taxes. LOL

2/ You are confused about tax rates b/c you are confusing Sarao (individual) with his UK company

Sarao's UK company's main activity was trading.
Companies pay UK corporation tax.
There is no CGT (capital gains), as such, for companies.
Any "capital gain" is taxed at the same corp tax rate. No choice

INDIVIDUALS either pay CGT and/or income tax, depending on the taxable event.
CGT is taxed at a higher tax rate than income tax

Those pikers on the other thread operate as INDIVIDUALS & are taxed as such.
They want their trading/"hedging" (LOL) to be treated as income tax (vs CGT) b/c of the lower tax rate. Doh

(5 lot pikers comparing themselves (as if) to some multi-$billion bank or property company that does real "hedging". LOL)

3/ Common sense? LOL

Problem is you (& most on ET) have no fucking common sense
(inc syswizard, the clueless, easily excitable, fanboy, dick-rider who doesn't even trade. LOL)

As they say, common sense is not too common..

4/ Already discussed in my post http://www.elitetrader.com/et/index...arket-flash-crash.291002/page-57#post-4187753

Sarao has already disclosed the tax shelter used (when he filed the UK company accounts & tax returns).
Taxman is not going to miss accumulated revenue of $40 million etc passing thru the accounts & his tax return. Doh

This was a few years ago - so would assume correspondence would already have been exchanged with HMRC (UK tax authorities)
(assume must have been a few issues raised given the large amounts)

Sarao has been completely forthright & open about it.
He's not actually evading or hiding anything from HMRC.

If he was trying to evade tax, why would he:
a) set up a company
b) file company accounts (PUBLICLY available) & tax returns showing $40 MM flowing thru, disclosing tax shelters etc

(if he wanted to evade tax, far simpler to set up a trading account under his personal name & simply never mention it to tax authority, accountants, or anyone, why file company accounts & tax returns.. Doh)

Now - that is not to say HMRC won't come back to him at a later date & re-open the case concerning the tax shelter.These things could happen

If Sarao decides to fight any decision on potential backtax in future (ie HMRC assert the tax shelter is not above board), ultimately a UK court of law decides on whether the tax shelter is legal.
Not know-nothing ETards who think they are judge & executioner

I got curious about the tax issue and after googling it:

". Sarao will have to pay 2.5 million pounds from the Swiss assets to the court once the money becomes available."

http://www.chicagobusiness.com/arti...n-cme-flash-crash-set-for-release-from-prison

That is still only 10% taxes although the UK doesn't tax spread betting. Interesting conversation on that very subject:

http://www.elitetrader.com/et/index.php?threads/uk-taxation-for-futures-and-options-trading.290262/

" any profit and loss that I will generate will be treated as capital gain (so not as income) thus calling for CGT (18% for base or 28% for higher tax payer). "

It seems to me that Sarao's 10% is still too low...

Anyhow, there are 3 different legal issues messed up as one:

1. Did he cause the crash? Well, he actually turned off the algo just before the crash, so the argument has to be that NOT running the algo caused it. Anyhow they won't be able to prove it, so verdict: INNOCENT

2. Did he spoof? Yes, and that being also illegal, verdict: GUILTY

3. Did he avoid UK taxes? Common sense tells me you have to pay more taxes on 40 million bucks gains than what he did, so verdict: GUILTY

To me the interesting part is that the UK government isn't even interested in the tax issue. Now once the US is done with him, there will be no money left for the UK treasury to get their hands on...

 

[syswizard]

Running_bear - yet another ET know-it-all....and loves to disparage fellow traders.
Well done A-hole.

re: "ie HMRC assert the tax shelter is not above board"
Of course it won't be above board....doh.
Stick the doh up your....

 

[Pekelo]

Thanks for getting us straight, oh you noble Lord. So you first acknowledge that he made a tax shelter and then ask why he would want to avoid taxes??? The very definition of a tax shelter is to avoid taxes you lowlife dumbfuck.

Why don't you tell us how much tax a company should pay on 40 million? You know what, I don't think you have a clue.

Now - that is not to say HMRC won't come back to him at a later date & re-open the case concerning the tax shelter.These things could happen

So you agree with me? How kind of you. Now you go on Ignore, where the other idiots belong...

Good night lovemuffin...

 

[Pekelo]

2 interesting links, the first one is rather long:

http://www.chicagolawyermagazine.com/Articles/2016/04/spoofing-April16.aspx

I learnt a lot about onion futures, or why they can not be traded anymore...

http://www.taxjustice.net/2015/04/28/the-offshore-wrapper-a-week-in-tax-justice-59/

"...he used anonymous companies in the Caribbean tax haven of Nevis in order to hide the wealth he made manipulating the markets. Nevis is a little-known ‘specialty’ tax haven, for connoisseurs of offshore murk.

But Mr Sarao appears to have missed the point of using anonymous offshore companies.

Our City genius decided to use a company title which included his own name and a description of what he was allegedly up to: “Nav Sarao Milking Markets Limited.” Brilliant."

 

[southall]

His company tax status maybe legal avoidance. Depends how good this scheme is and how well it was implemented by his offshore lawyers and accountants.
But if everything was done properly then it will be legal and there will be no tax pay.

Having said that if the tax man wants to challenge the scheme then final word will be from the Courts to declare it legal or not. But that takes many years.