During the Wall Street flash crash of 6 May 2010, the Dow Jones index lost 700 points in a matter of minutes, before recovering just as quickly. US authorities, which claims Sarao made $40m in profits from 2010 to 2014, are seeking to extradite him to stand trial in Illinois.The Commodity Futures Trading Commission (CFTC) suggested that Sarao was first contacted in 2009 by regulators who questioned his trading activity. Upon finding that these activities didn’t stop, the US Department of Justice has charged him with wire fraud, commodities fraud and market manipulation. The Justice Department said: “By allegedly placing multiple, simultaneous, large-volume sell orders at different price points – a technique known as ‘layering’ – Sarao created the appearance of substantial supply in the market.” Separately, the CFTC released details of civil charges against Sarao and his company Nav Sarao Futures. Sarao was arrested a day after Paul Volcker, former chair of the Federal Reserve, revived a call for the CFTC to be merged with the Securities and Exchange Commission (SEC). He warned that the US’s regulatory system has left some systemic risks unchecked. Read more about the stock market:
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