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'Flash Crash' Trader Navinder Sarao Faces US Extradition 156

Posted by timothy from the he's-gotta-take-some-awesome-vitamins-for-that dept.
mrspoonsi writes with this excerpt from the BBC: Navinder Sarao, the trader accused of helping to trigger the U.S. "flash crash," can be extradited to face trial, a court has ruled. Mr Sarao traded on the Chicago Mercantile Exchange from his parents' home near Heathrow Airport in London. Mr Sarao, 37, is accused of contributing to events on 6 May 2010, when the Dow Jones share index briefly fell more than 1,000 points. The flash crash on 6 May 2010 temporarily wiped nearly $1 trillion off the value of shares. US authorities want Mr Sarao to stand trial on 22 criminal counts. They allege he is guilty of "spoofing" — the practice of placing large orders that manipulate the markets and then cancelling or changing them, allowing him to buy or sell at a profit. Mr Sarao's spoofing netted him a profit of $40m (£28m), they argue. The charges that Mr Sarao faces carry sentences totalling a maximum of 380 years. Reader whoever57 links to a similar report at the New York Times, which notes "This is not the last step for Mr. Sarao, as the extradition must next be reviewed by the Home Secretary." "As the submitter," writes whoever57, "it's not clear to me how this man did anything different from the high-speed and algorithmic traders do every day."
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'Flash Crash' Trader Navinder Sarao Faces US Extradition More

'Flash Crash' Trader Navinder Sarao Faces US Extradition

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  • Guilty of shit.. (Score:5, Insightful)

    by brxndxn ( 461473 ) on Wednesday March 23, 2016 @10:16PM (#51766407)
    Like anything that happens in the corrupt UK or US, the only thing Sarao is guilty of is not already being a wealthy insider. Algorithmic traders do this exact thing a trillion times every trading day. Banks did soo much worse.. and yet none of the banking executives are sitting in jail.

    • He is a criminal (Score:5, Insightful)

      by lucm ( 889690 ) on Thursday March 24, 2016 @01:23AM (#51766861)

      Like anything that happens in the corrupt UK or US, the only thing Sarao is guilty of is not already being a wealthy insider. Algorithmic traders do this exact thing a trillion times every trading day. Banks did soo much worse.. and yet none of the banking executives are sitting in jail.

      That's not what the guy did. What he did was place huge orders then cancel them to cheat on quick pricing fluctuations caused by his own fake transactions. This is not only dishonest, this is outright illegal, and it's not something legitimate investment banks do.

      Let's not make every story about thieves and scammers a general complaint about the financial services industry otherwise actual issues will get lost in the noise.

      • Re: He is a criminal (Score:5, Insightful)

        by Anonymous Coward on Thursday March 24, 2016 @03:01AM (#51767011)

        But had it been a big investment bank doing this nobody would be going to jail for 380 years. I bet it would be merely considered a glitch and the bank would agree never to do it again etc. Since this was an individual demonstrating that nobody actually needs those multi billion dollar monster banks, well the bankers just got scared. This Mr Sarao has to pay since in the eyes of our financial 0.01 percent banker overlords he is a very scary specimen indeed. Once he is in prison eating Bubba's dick everything is back to normal and the billionaire banker can order those 20,000 dollar escort hookers again without any worries.

        • But had it been a big investment bank doing this nobody would be going to jail for 380 years.

          Corporations aren't jailed. They are fined, and the SEC does hand out it's fair share to investment bankers too.

      • Re: He is a criminal (Score:2, Interesting)

        by Anonymous Coward

        Outright illegal? Not in the UK it is not, and that is the main problem with this.

      • Re:He is a criminal (Score:5, Insightful)

        by Snufu ( 1049644 ) on Thursday March 24, 2016 @03:34AM (#51767067)

        His only crime was doing this faster, better, or with less obfuscation than the big wigs who thought they had purchased exclusive privilege to perpetrate high frequency trading scams.

      • Re: (Score:3, Interesting)

        by Anonymous Coward

        The hell it is.

        The computerised SYSTEMS themselves are what should be illegal.
        He just played them at their own game and made money because those idiots and their crap algorithms are twitchy and jump on bandwagons too easily.

        It most certainly is not illegal in the UK. Piss off America.
        The only reason he is being attacked by this extradition case is some rich bankers lost out and they want blood.

      • That's not what the guy did.

        You're right. It's more like LIBOR or the Goldman Sachs aluminum business. Still dishonest, but not illegal, which is why legitimate investments banks do them.

      • Re: (Score:1)

        by Anonymous Coward

        But honestly, I don't see a whole lot of difference between that and HFT, which is basically
        1) watch what people are buying and how much they are willing to pay
        2) decide if any of them are about to buy into a good deal
        3) beat them to the source and snatch that deal right out from under them, but not because you want it, but because you...
        4) turn right around and sell it to the person originally buying it, but for less of a deal
        5) pocket the difference.

        That would be like if you were an employee working at eb

        • Re: (Score:2)

          by lucm ( 889690 )

          Front-running and cancelling huge orders to artificially move prices are two different things. That's why this guy will go to jail and investment bankers who do HFT won't.

    • Re: (Score:2)

      by tnk1 ( 899206 )

      Like anything that happens in the corrupt UK or US, the only thing Sarao is guilty of is not already being a wealthy insider. Algorithmic traders do this exact thing a trillion times every trading day. Banks did soo much worse.. and yet none of the banking executives are sitting in jail.

      Algorithmic traders have yet to wipe off one trillion dollars and cause a 1000 point stock market crash. If they do, I would argue they would have done the same as this person and might well get a similar set of charges.

      Be aware that skating close to the line, like these traders do, and going over the line, like this person did, are probably not actions that are too far apart in terms of what they did, but what matters is the result, and not how close you are to one another.

      If you drive really fast on a ro

  • Beat at their own game. (Score:5, Insightful)

    by 0100010001010011 ( 652467 ) on Wednesday March 23, 2016 @10:17PM (#51766417)

    You should know by now that sort of behavior is only tolerated at the highest levels. If a normal person figures out how the system works that's bad.

    • Who's game? Market manipulation is illegal for all. Profiting on other people's manipulation is fair game, which is what most of the high frequency traders do.

  • Spoofing (Score:5, Insightful)

    by Anonymous Coward on Wednesday March 23, 2016 @10:19PM (#51766427)

    > They allege he is guilty of "spoofing" — the practice of placing large orders that manipulate the markets and then cancelling or changing them

    Isnt this standard practice now? Isnt that how most HFT makes money, and it's why retail investors are advised to never place market orders anymore.

    That bid for 4.00$? Nah man, j/k. Cancelled. Here's one for 3.99$ though.
    It's K? ROFL. Cancelled. How about 3.98$?
    Still K? kekekekeke. Cancelled. I'll offer you 3.97$
    Still K? huehuehue. Cancelled. 3.96. ...
    3.84$. Oh? You wont sell for 3.84$? No prob bro. Here's an order for 3.85$ that I already know that you will take because I just cancelled the order that you tried to fill.
    AND SOLD.

    K. Now... place a bid for 4.00$ and lets see who's selling.
    REPEAT.

    • Isnt this standard practice now?

      No

      Isnt that how most HFT makes money, and it's why retail investors are advised to never place market orders anymore.

      Also no.

      It looks the same but there's differences in the details. Your below example is one of finding a tolerable price. What he was doing is placing huge orders to intentionally manipulate the value of a stock and then cancelling.

      One is finding out how much something is worth to someone,
      The other is actively changing it's worth to everyone.

  • If the system allows it.... (Score:5, Interesting)

    by z0idberg ( 888892 ) on Wednesday March 23, 2016 @10:19PM (#51766429)

    "the practice of placing large orders that manipulate the markets and then cancelling or changing them"

    If the market systems allow this behaviour then it is a problem with the system. Whether he is guilty of a crime or not is a separate issue (just because you CAN do something doesn't mean it is legal), but if the system allows it to happen then the system needs to tightened down to stop it.

    Unless of course those the exploit it regularly with impunity don't want it closed...

    • Re: (Score:3)

      by Teppy ( 105859 )
      Correct, there's a problem with the system. This system [lzf.com] fixes it by charging non-refundable royalties when placing an order, and by awarding those royalties to traders that do leave market orders in place until they execute.
    • how do you stop it though. Unless you know that the buyer or sellers intent is to manipulate the market how can you tell their order is fake or legitimate? being able to cancel an order is important. The issue here is placing of orders where their was never an intent to follow through on those orders. I am not sure I see a way to counter that except through rules or laws as no system can adequately judge the intent at the time of the order.

      • Why is the ability to cancel an order important?

        • because you may get information that changes your decision or a reason to alter the order to buy/sell more or less, as nothing has been purchased/sold yet you should be well within your rights to change your mind, only after a transaction has taken place should an order be irreversible. I regularly change outstanding orders I place. I have both buy and sell orders that sit their for weeks sometimes waiting for price triggers (e.g. Buy Share X at price Y), however I also sometimes change my mind, e.g. the pr

          • Sure, if the order is sitting out there for weeks, that makes sense, For nanoseconds, not so much. We could only allow orders to be cancelled after the market is closed for the day, for instance.

            • Re:If the system allows it.... (Score:4, Interesting)

              by bloodhawk ( 813939 ) on Thursday March 24, 2016 @04:31AM (#51767163)
              Ahhh so if I decide in the morning to buy and then at lunch time news is issued that makes me change my mind for a purchase that hasn't actually been made yet then I am fucked? even though I haven't actually got the benefit of the shares in my portfolio or having actually made a contract of purchase. such changes benefit the rich and large investors the most (i.e. people that can afford to sit and watch the markets all day and make decisions as the market changes). I can agree with nanoseconds, perhaps even a few seconds, beyond that it you are basically taking away peoples ability to make legitimate decisions simply because of a few arseholes like those in the article.

              • Yeah, you're fucked. So am I. So is everyone else. Maybe some other news will come out at 11. Maybe you should just fucking hold on to the stock for a few weeks until it recovers. Seems fair to me.

                I thought stocks were about fucking investing. I can only change my fucking 401k once per day and even then they discourage that. On a majority of days it goes up. Some days it goes down. I'm vested in two funds which are vested in a bunch more stocks. On average, it goes up. Stop twitching to every bre

                • Re: (Score:2)

                  by Alioth ( 221270 )

                  If you're upset about only being able to change your 401(k) once per day, you can easily solve that by opening a regular trading account and using that.

                • nanny state arseholes like you make me sick. this has nothing to do with 401k and is all about normal trading. What you are proposing as good changes turns the market into a fucking casino where once you make a decision, your money is locked into that decision without any benefit or ability to make informed decisions even though you haven't bought anything, all because you think it is more important to make laws and rules to protect people from themselves. Better ban guns world wide as you could shoot your

  • Who's making the money? Who's going to prison? (Score:5, Insightful)

    by philovivero ( 321158 ) on Wednesday March 23, 2016 @10:31PM (#51766467) Homepage Journal

    Ah, yes, the one fellow who wiped away a trillion dollars of value. What do you call it when something loses a trillion dollars of value, solely due to the actions of the people who hold full ownership of the thing? A bubble.

    It seems there's a small class of people from whom, if you shift value to yourself, will guarantee you become a criminal, even an international one. And another large class of people from whom, if you shift value to yourself, will guarantee wealth.

    The 2008 mortgage-backed securities fiasco contrasted against this case is very telling. Where's the list of names of who went to prison in 2008-2009? From whom did they make most of their money?

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      No way did he cause the flash crash, it was some hedge fund doing the same thing with hugely larger amounts in trades as has already been determined. He made 30 million pounds over a couple years and got singled out. What he did is wrong, but like all 18 million other commenters say, the system allows it. I put in orders and change my mind, but I am not spoofing anything. My orders don't get filled and I change my mind and cancel. He used a computer to do it 30 times a second. If everyone else weren't

  • The lesson here (Score:5, Insightful)

    by mikeiver1 ( 1630021 ) on Wednesday March 23, 2016 @10:35PM (#51766479)
    The lesson here is do not defraud the rich. They have the power of the government and the law to manipulate to their own benefit. You steal from the poor. You know, like the banks, investment houses, and the insurance companies did and continue to do to you and me. The government will even reward you for be so damn good at it!

    • Re:The lesson here (Score:5, Insightful)

      by Mitreya ( 579078 ) <<moc.liamg> <ta> <ayertim>> on Wednesday March 23, 2016 @11:09PM (#51766595)

      The lesson here is do not defraud the rich.

      I think the lesson here is "do not draw attention to the man behind the curtain". Whether or not he made any money is unimportant.

      The electronic/automated trading system is an accident waiting to happen and he made it clear to the general public.

    • Agreed. The same lesson was demonstrated during the Madoff incident. Trillions of dollars lost by corrupt bankers selling toxic-waste MBS to unsuspecting pension funds yet the only person in the financial industry who did time for the entire financial crisis was the one guy who stole from Wall Street.

    • When shares take a dive EVERYONE who owns shares suffers plus people who have pension and other policies that invest in the market.

      The financial system isn't a them and us - all of us in the western world rely on it and pretending its some boys club where only the rich suffer if the market tanks (they don't - they have a huge porfolio of other investments if they have any sense) is a lie. Its usually the little guy who relies on dividend payments once a quarter who suffers

  • confused on the wrong issue (Score:5, Insightful)

    by frovingslosh ( 582462 ) on Wednesday March 23, 2016 @10:57PM (#51766545)

    "As the submitter," writes whoever57, "it's not clear to me how this man did anything different from the high-speed and algorithmic traders do every day."

    That's the problem you have with this? The problem that I have is that someone is being accused of something he supposedly did outside the U.S. but is being forcibly brought to the U.S. We supposedly can't re-try known murderer O.J. because of double jeopardy. but now anyone who does anything while outside the U.S. can be subject to U.S. extradition! Yea, I read the part about the trading being on the Chicago Mercantile Exchange, but that just tells me that we should lock up the greedy bastards in this country that allow that to happen, otherwise we open our institutions to attack from China or any other nation that we can't extradite from. We have an abundance of crooks in the financial markets in this country that they should be going after who would be far better targets than this American abuse of power.

    • Re:confused on the wrong issue (Score:4, Insightful)

      by whoever57 ( 658626 ) on Wednesday March 23, 2016 @11:21PM (#51766631) Journal

      That's the problem you have with this? The problem that I have is that someone is being accused of something he supposedly did outside the U.S. but is being forcibly brought to the U.S. We supposedly can't re-try known murderer O.J. because of double jeopardy. but now anyone who does anything while outside the U.S. can be subject to U.S. extradition!

      Yeah, that too. But I think that the fact that what he did was no different from what a group of companies do millions (billions?) of times per day, with no criminal indictment in sight, seems to be the bigger issue. As other have pointed out, his real crime was merely taking part in the riches that the mega-wealthy indulge in.

    • That's the problem you have with this? The problem that I have is that someone is being accused of something he supposedly did outside the U.S. but is being forcibly brought to the U.S.

      That's called extradition, and extradition treaties have existed for hundreds of years. It's nothing new. Would you rather live in a world with no extradition treaties, where all a criminal had to do was make it across the border, or launch his attacks from the other side of the border and he/she gets away with it?

      • It is called jurisdiction. I don't like that I live in a world where if I burn a "holy book" or draw a picture that some religious nut job considers to be a "sacrilege" that I could be shipped of to some zealot controlled country just because our leaders negotiated a bad treaty and they don't want to risk not being able to extradite a terrorist some day or loosing face because they negotiated a bad treaty in the first place. The knife cuts both ways. If a person is guilty of a crime it should at the very le

    • The problem that I have is that someone is being accused of something he supposedly did outside the U.S. but is being forcibly brought to the U.S.

      He did it in the US (that's where the servers responding to his orders were). He was in England at the time. See also, why you can get extradited if you stand on the other side of the border while using a sniper rifle.

  • High Speed Trading is a Dangerous Fiction (Score:5, Insightful)

    by Required Snark ( 1702878 ) on Thursday March 24, 2016 @12:03AM (#51766709)
    There is no way to distinguish between an algorithmic trading failure and a cyber attack against the trading system.

    How can real world value change by billions of dollars on a scale of milliseconds? The only real world events that can make that happen are nuclear weapons or meteor strikes. Even a massive earthquake lasts seconds, and huge storms take hours to days to do their damage.

    High speed trading is a fictional construct because it creates a version of value that is decoupled from the real world. It is by definition a game that is only available to insiders. That's why incredible amounts of money are spent to build data centers as near as possible to trading hubs, since an advantage of milliseconds makes the difference between success and failure.

    It is the opposite of a level playing field. It creates a system where there is a vast gap between insiders and everyone else. There is no free market capitalism with this kind of division of access.

    For all the Libertards out there, being able to trade stock is not equivalent to high speed trading. High speed trading makes money on a millisecond scale. Trading outside that realm, even using computers is seconds behind which translates to trading in the past. First mover advantage is available only for the inside players. Free market capitalism doesn't really exist, it's just propaganda to keep the peasants from causing trouble.

    • very well said, completely incorrect factually (Score:5, Insightful)

      by raymorris ( 2726007 ) on Thursday March 24, 2016 @05:32AM (#51767283) Journal

      You could be a political speech writer. Your post no doubt got some people a bit pumped up. Also like most political speeches, what you said is the opposite of the actual facts.

      I'm referring to the factual claims you make such as:
      > It is by definition a game that is only available to insiders.

      > It is the opposite of a level playing field. It creates a system where there is a vast gap between insiders and everyone else.
      > There is no free market capitalism with this kind of division of access.

      > For all the Libertards out there, being able to trade stock is not equivalent to high speed trading

      Those statements are simply false on the facts. If you want to put your money into high frequency trading trading, you can send it on over to Turner Spectrum or any of the other 200 or so trading funds you can find on Morningstar. I wouldn't recommend it, because HFT doesn't reliably perform any better than a plain index fund, due to the high transaction costs from buying and selling all the time.

      It feels good to rant about "Wall Street", yet the fact is, most of that money on Wall Street is someone's retirement savings, and when "a fund" makes money that simply means that the owner's of the fund, grandma and grandpa, have a few extra dollars to live on.

      If you think the best Wall Street traders have some special advantage, consider this. A really good trader who can make higher profit percentage will of course make alot more money trading with $100 billion than trading with $10 million. The big $100 billion fund can of course afford to hire the best of best to manage the fund. Therefore, the best traders tend to work for the biggest funds, where they can make the most money. The "biggest funds" include a bunch of Vanguard funds. Who are these insiders who are invested in Vanguard funds? Anyone with $500 savings, Vanguard invests the savings of millions of people, including me. There's the insider secret for you - invest the first 10% of your income with Vanguard and you'll get rich just like like their other millions of customers, slowly.

      * Yes, you could choose an fund that trades on milliseconds rather than a Vanguard index fund, but I wouldn't suggest it because the risk-adjusted returns aren't any better. A Vanguard fund has expenses around 0.08%, an HFT fund will have expenses 50 times higher.

      • Shoot, accidentally modded Redundant instead of Insighful, so I'm posting to undo that.

        raymorris' comment is the best in the whole thread.

      • s. A really good trader who can make higher profit percentage will of course make alot more money trading with $100 billion than trading with $10 million.

        Assuming facts not in evidence. Vangard funds charge a lower rate. And, IIRC those much bigger funds have many more people to split up the commissions between.

        • > those much bigger funds have many more people to split up the commissions between.

          They have a lot more people paying commissions, splitting the costs of a good manager. Figure about 4 million people in one of the Vanguard funds. If each pays $2 management commission per year, that's $8 million dollars for the fund, which will buy a pretty darn good manager or three. On the other hand, contrast small fund with 1,000 investors. If each investor pays a hundred times as much, that's $100K. Which do yo

          • A small hedge fund may have 100-300M AUM. Their commission will run something like 3% + 5% of profits (so lets call it 4%). That's 4M - 12M in commissions.

            Further, that hedge fund will voluntarily close, refusing to take more assets in, because hiring the extra people to do the extra management results in less dollars.

            Also, you assume all $8M goes to the manager or 3. There's a lot of overhead/dealing with customers. And it takes more than 3 people to maneuver 1B+ dollars.

    • You, like so many others seem to be under the impression that there was some 'golden age' of capitalism where stock market trading was a level playing field and anyone could waltz onto the NYSE floor and bid up some stocks. There have always been barriers to entry to directly trading on these markets, back then it was buying/renting a seat on the exchange. Now it's technology costs and fees to co-locate in the exchange's datacenter. And most exchanges these days will spool fiber within these datacenters so

    • The difference between the two is intent which is why, in the US, prosecutors often have to show "mens rea" In this case, the intent is pretty clear but prosecutors will still have to prove it.
  • I realize that this is faint praise, but I'd just like to say how delighted I am to see phrases like "They allege he is guilty of "spoofing" - [here's what spoofing is]" and, "Mr Sarao's spoofing netted him a profit of $40m (£28m), they argue."

    I've grown accustomed to things like this reported as, "Mr Sarao's spoofing netted him a profit of $40m (£28m)." or, "He has been arrested for "spoofing" - [here's what spoofing is]". It doesn't seem like a big difference but it really is, and this shou

    • Re: (Score:2)

      by lucm ( 889690 )

      Why are you delighted? It's like having a "may contain nuts" sticker on pretty much anything you buy at the grocery store just to cover the ass of the manufacturer. You may find it cute the first time but when you see it on tuna cans and such, it gets old real quick.

      • Re: (Score:2)

        by guises ( 2423402 )
        You're suggesting that nothing short of convictions should be reported? Maybe that's for the best. The argument is that this invites corruption of the judicial system, but perhaps reporting on the corruption of the judicial system when and if it happens is a better solution than reporting on a whole bunch of stuff which might possibly be evidence of corruption somewhere down the line.

        Especially given the harmful nature of throwing around these sorts of accusations and the mandate of protecting the innoce

        • Re: (Score:2)

          by lucm ( 889690 )

          No. What I suggest is that the press should report the arrest. "Mr X has been arrested for a Y charge".

          Unlike the "Mr X may or may not have been alleged to possibly have been said to have been involved in what some people might consider to be identified by the police as Y" approach which amounts to cowardly gossip.

    • While I appreciate not assuming guilt, "he has been arrested for X" is a fact. I've been charged with a crime (and entered a plea of not guilty), so it's perfectly reasonable to say that. I don't consider it reasonable to call me a criminal or say I committed a crime.

  • I hope he posted his software to github.. if Anonymous got ahold of it, there would be too many cases to prosecute and the financial industry would just have to fix things properly.

    When one person breaks an unjust law, they usually go to jail. When *everyone* breaks an unjust law, the law needs to be fixed.

    CAPTCHA: pleaded

    • Re: (Score:2)

      by lucm ( 889690 )

      I hope he posted his software to github.. if Anonymous got ahold of it, there would be too many cases to prosecute and the financial industry would just have to fix things properly.

      Good idea. That way it will be just like with the Paypal thing where a bunch of noobs who didn't know better got caught for using a freeware DOS tool that doesn't hide their IP address.

      In this case who cares if a few people get 387 years of jail time; as a great man once said, "blood alone moves the wheels of history".

  • The dumb part of the summary (Score:4, Informative)

    by Anonymous Coward on Thursday March 24, 2016 @01:00AM (#51766829)
    "it's not clear to me how this man did anything different from the high-speed and algorithmic traders do every day." . He deliberately made orders that he had no intention of following through on in order to manipulate the market in a illegal manner. How the fuck is that hard to differentiate between that and high-speed traders? I don't like High frequency trading algorithms but they were well within the law and were exploiting their speed at reacting to market rather than deliberately manipulating the market. The difference is not small or subtle, one is clearly illegal market manipulation, one is ethically questionable and unfair but legal.

    • Re:The dumb part of the summary (Score:4, Informative)

      by johannesg ( 664142 ) on Thursday March 24, 2016 @07:46AM (#51767613)

      High frequency traders do the ***exact same thing***: they place orders they have no intention whatsoever of following up on.

      The stock market needs a simple rule: every offer, every transaction, needs to come with a 24h cooldown period. That will wipe out the lot of them, and restore some order and sanity to the market.

  • Arrest the institutional traders (Score:3)

    by Luthair ( 847766 ) on Thursday March 24, 2016 @01:23AM (#51766857)
    They're running the systems that saw larger orders/sales and actually crashed the system.

  • A couple of gamblers learned how to push the buttons on a video poker machine in a specific sequence to make them pay off, exploiting a weakness in the software or "system" if you wish.

    One wonders is this fellow is in the same situation. He made trades he was legally allowed to make, in a sequence that made him money. Was he an insider? Did he know something someone else did not know? Was he in a position of fiduciary responsibility? We'll find out. But he could use this incredibly simple defense if he's cl

  • What about (Score:1)

    by Anonymous Coward

    ... briefly fell more than 1,000 points ...

    The Dow Jones IA did the same in August 2015 and the US DOJ did nothing.

    ... is accused of contributing to events ...

    Stock exchange trading systems crash every few years (see May 2012), but the stock exchange isn't accused of "contributing to events".

    ... placing large orders that manipulate the markets ...

    How does this differ from Knight Capital Group and friends, who also place large orders? (See August 2012.)

    "... faulty computer algorithms, which sold $4.1 billion worth of E-Mini Standard & Poor’s 500 futures contracts ... "

    Just like 'black Monday' (Oct 1987), most of the damage done during t

  • I don't see anything illegal. (Score:3)

    by master_p ( 608214 ) on Thursday March 24, 2016 @03:18AM (#51767043)

    Since the system gives you the ability to cancel orders, I don't see what the guy did as illegal.

    It is within the rules of the game, so it is legal 100%.

    • Re: (Score:1)

      by Anonymous Coward

      But he isn't in the special club that is allowed to exploit the flaws in the system, so he must be punished. Otherwise the plebs might start getting ideas above their station.

      • There is no special club. Everybody is allowed to submit orders that they intend to trade. What you can't do is submit an order without intent to trade it at the time it's submitted. It's not illegal for me to accidentally bump into you walking down a busy street. It is illegal for me to intentionally shove you. In this case, prosecution will have to prove intent. But I don't think it will be very difficult. HFT traders make money if and only if their trades execute. Otherwise they just pay insane c

    • If every possible action was legal in a game, then there would be no need for any rules. Preventing actions that cause the game to fail is exactly why we have rules. This guy broke a rather clear rule, and now he is getting punished for it.

      BTW, his real failure was simply not being creative enough with his dishonesty. Libor, sub-prime, the Goldman Sachs aluminum scam, all demonstrate ways financiers have acted dishonestly without technically breaking a 'rule' and hence get to keep their billions and suffer

    • Since the system gives you the ability to cancel orders, I don't see what the guy did as illegal.

      It is within the rules of the game, so it is legal 100%.

      Assuming, you are American, you have free speech rights protected in the Constitution. But your Constitutional rights are not absolute. Even the late Justice Scalia said that the 2nd amendment didn't mean that there could never be any restrictions on guns. So to use the easiest example for you to understand, you have the right to yell "Fire!" at the top of your lungs. If you do that at home and nobody else hears you, then there's no problem. If you exercise this right in a crowded theater where there i

  • Why does the ability to trade at this speed even exist, apart from letting traders make profits over the backs of companies the stock market is supposed to fund?

    This guy placed high-speed order that he had no intent to keep.
    How is this different from regular high-speed traders place order stock without any intent to keep any of it?

  • Why does the system allow someone to place a large order and cancel it without any penalty?

    If some lone wolf who got caught did that, what is the guarantee there are not others? What is the guarantee the others too are lone wolves?

    It stinks that all the wealth we think we have is in a system that is so vulnerable. Calling a colander a bucket does not make any less leaky!

  • How does one guy placing orders cause a flash crash?

  • If he'd been working for Goldman Sachs, he'd have gotten a bonus instead of an indictment.

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