Behold The Patsy: First Photograph Emerges Of The "Criminal Mastermind" Reponsible For The Flash Crash

Tyler Durden's picture

Wall Street has found a new, unwitting source of humor: the CFTC.

The reason, of course, is that according to the "regulator" the gullible investing public is expected to believe that one single person, operating out of a non-collocated, latency fortress in Hounslow (despite allegedly making $40 million over 5 years from spoofing)...

 

... is responsible for the May 2010 flash crash.

The implication being that the perpetrator has been caught and now confidence in broken markets can be restored, however what the CFTC has in effect done is further undermine faith in a market, which apparently is so defenseless it has absolutely no countermeasures to the simplest of predatory trading strategies, namely spoofing: spoofing which takes place millions of times every single day across all global markets (as we showed back in 2013 in Watch The Banned HFT Spoofing Algo In Action).

The CFTC's inadvertent humor, however, is no laughing matter to the person implicated in the latest despeate attempt to scapegoat a non-US institution for the flash crash (just ahead of the statue of limitations running out no less): not only is Navinder Singh Sarao, a British national, facing decades in prison in the worst case as reported earlier, but moments ago he had to pay a massive 5 million pound bail to stay out of jail for the duration of his case: an amount that is usually reserved for Class A felons, those who have caused grievous bodily injury and suffering, or worse, instead of merely a BTFD opportunity.

Curiously, there have been precious few actual glimpses of the infamous flash crash mastermind who has seemingly kept a very low public profile, but moments ago the first sketch emerged of him during his court appearance.

As the NYT reports, "appearing in court in London dressed in a canary yellow sweatshirt and white track suit pants, the trader, Navinder Singh Sarao, a British national, sat behind a glass wall looking dazed by the proceedings around him." We, too would be dazed by the stupidity of the CFTC, if faced with the same ridiculous charge.

His defense lawyer, Joel Smith, said that the arrest had come as a “bolt out of the blue” and that he had struggled to connect with any of his client’s family or friends. He eventually contacted Mr. Sarao’s father, but said he could not deduce much from the patchy conversation. Mr. Sarao lives with his parents and down the road from his brother. He was born and educated in Britain and attended Brunel University London.

The NYT also adds that "Mr. Sarao appeared to lack the bravado woven through the criminal complaint. At one point, Mr. Sarao told his broker that when the Chicago Mercantile Exchange contacted him to inquire into his suspicious orders, he told them to “kiss my ass.” He is alleged to have made $40 million in profits."

This is the sketch:

 

And moments ago, the Telegraph ran the first actual photo of the "criminal mastermind."

 

More from the Telegraph:

A former school friend, who asked not to be named told The Telegraph: "Navinder was really bright and was in the top set for all his subjects. He was a bit of a cheeky chap but was popular.

 

"He was a bit of a geek but was funny also. He studied Maths and Science at A'Level. He was a bit of a prankster but never got caught."

 

In his school year book his teacher wrote that he was still late almost every day.

 

Mr Sarao is the youngest of three sons. Raj, the oldest, lives with his wife and two children opposite his parents.

 

Anil Puri, 41, who works in web design, grew up round the corner from Navinder and went to primary school with him and his brothers. He said "We used to play football, badminton and athletics in the street when we were young. There were no computers in those days.

 

"He (Navinder) was very bright, a loud, chirpy chap, a friendly guy. He was the youngest of the three but he was the most confident. His nickname was Brooks but I can't remember where that came from. "He was definitely an ambitious guy, definitely clued up, street wise."

 

Mahmood Atif, 36, who lives down the road from Mr Sarao's parents said: "They are a nice family. The family will be upset. It's a shock." Brinder Bedi, 39, another schoolfriend, said: "They were very close, all the boys. They all used to wear their football gear. Nav was sporty, he seemed to be a normal kid."

 

A man believed to be Mr Sarao's 67-year-old father Nachhattar Singh Sarao, arrived in a cab at the family home wearing a Nike baseball cap and sunglasses. He would only say: "This is private property. Get out."

So with the Sarao "flash crash" mystery solved, we eagerly look forward to the CFTC exposing the daytrading teenager operating out of a hut in Thailand who was responsible for the October 15, 2014 Treasury flash crash, followed promptly by the Russian grandma in Vladivostok whose trigger happy FXat finger resulted to the US Dollar flash crash from March 18.

Because clearly without "confidence" that the market is fixed, no self-respecting retail investor will buy everything that hedge funds, prop desks, and ultimately central banks are so desperate to sell at these all time high prices.

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So Close's picture

Must... find... patsy..

Headbanger's picture

THAT'S THE GUY!

GET EM!   GET EM!!

Bunghole's picture

Next we'll be told he was working for ISIS or Putin.

Turn it up to 11

Hype Alert's picture

He failed to IPO like VIRTU!  Get him!

Gaius Frakkin' Baltar's picture

Another Indian fall-guy... Let this be another lesson to all you Indians. The Western system is not your friend. Defect now while you still have a chance. Be a whistle-blower instead of a fall-guy.

jbvtme's picture

not sure how true this is, but i hear he graduated from sandy hook elementary...

Harlequin001's picture

Well he looks guilty as fuck. I mean, he isn't white, and he doesn't have White House cufflinks. hang 'im...

AlaricBalth's picture

Excerpt from the criminal complaint: http://www.justice.gov/sites/default/files/opa/press-releases/attachment...

Via an email I have reviewed dated March 23, 2010, the CME

contacted SARAO's FCM to alert them that SARAO "just had 1613 'This order is not

in the book' reject messages in the last 5 minutes." (Based on my review of the

emails and my participation in this investigation, I believe that these rejection

messages were issued when a trader sought to fill one of SARAO's orders, only to

find that the order had already been canceled.) A member of the FCM's compliance

department looked into the issue and reported by email to another employee of the

FCM that he could "see that [SARAO]'s using [Automated Trading Program #1]"

and that "[i]t looks like he's deleting a huge amount of orders a second which seems

to be the root cause of the issue." Another representative of the FCM forwarded

this email correspondence to SARAO, informing him that the CME had contacted

the FCM about his cancellation of a "huge amount of orders from the order book,''

and that such conduct was "not allowed." On March 31, 2010, SARAO responded by

email, writing to the FCM and CME representatives that he would "like to apologise

for any inconvenience caused by this." SARAO claimed that he "was just showing a

friend of mine what occurs on the bid side of the market almost 24 hours a day, by

the high frequency geeks,'' and questioned whether the CME's action in responding

to his conduct meant that "the mass manipulation of the high frequency nerds is

going to end." Referring to another trader, SARAO further asked, "I see he

continues to do this all day every day, yet you have a problem when I showed

someone it for 5 mins?" 

strannick's picture

.Bankers. Load your zip drives with damming info, cause your next. Leverage is what you need and the only language these Overlords understand. Course they may just "suicide" you.

AlaricBalth's picture

The complaint is a fascinating read, which clearly shows lead investigator DOJ Fraud Section Assistant Chief Brent S. Wible does not have the knowledge or experience to understand the shear scope of HFT's.

Mr. Wible's bio is here:

https://www.linkedin.com/pub/brent-wible/93/3b9/47a

Undergrad History major, Yale Law and Peace Corp volunteer and Fraud Investigator for less than one year.

NotApplicable's picture

So... the scapegoat circle is complete?

pods's picture

So the Indian guy gets slammed cause he caused JPM and GS to lose money on 1 trading day.

Put a beanie on Nav and save yourself.  Come up with some story how you dyed your skin brown to avoid all the Anti-Semites running rampant.

pods

mkkby's picture

No, this allows goldman and jpm to continue using HFT with impunity.  The "bad" guy was a ferner with brown skin.  Not the noble banksters doing god's work to keep us all in iphones and pink slime burgers.

No banker will ever be stopped, no matter how egregious their crime.  At the most they'll single out a foreign bank and slap them with a tiny fine.

PartysOver's picture

The dude got digital game.  Well played.

philosophers bone's picture

"Lead investigator does not have the knowledge or experience to understand the shear scope of HFTs."

But that's the only hope left.  Any regulator who has had their head up their ass for the past 7 years isn't going to do anything as it will prove their incompetence and complacency, whether due to laziness, ignorance, wilfull blindness, expectation of a promotion to a Wall Street career or just cutting their industry buddies a break, all in the name of self-regulation.

What can happen is some young inexperienced but ethical and not yet corrupted investigator looks at this activity and calls it what it is:  Spoofing, which has always been illegal and prosecuted.

Either he makes a difference and the bankers start jumping off rooftops, or he gets demoted because he "doesn't understand the way markets work".  Or he get nailgunned or shitgummed. 

mtl4's picture

Interestingly he's got a link to Texas and Yale..........must be a skull and bones member to have moved up the beanpole that fast.

Grinder74's picture

Funny thing, Indians are technically "white".

813kml's picture

They should really just stay on the reservation.

RaceToTheBottom's picture

I expect a PC response to include the ETRADE Baby as the ringleader...

booboo's picture

"Be a whistle-blower instead of a fall-guy"

Not a wise choice these days, Obama brought Chicago politics national and the one thing you learn fast is that turning states evidence will get you 40 grains of lead or 40 pounds of cement over shoes. But on a national level you get 40 years in a federal lockup for blowing a whistle on corruption.

Best to dummy up and allow the storm to pass, the family doesnt deserve to be ran through the ringer and bankrupted, it will all be brought to light soon and the chances of the DC criminal class getting a pass will be slim to none, the question is will there be mob justice or will we maintain a civil system of extracting justice.

In a better time this guy would be used by the prosecutor to chew through to the top criminal but now this guy is just the firewall.

exi1ed0ne's picture

The trick to winning is to live long enough with enough resources to be able to make a difference when the time comes for action, just like investing.  Move too early, and you are out of the game.

However kudos to this guy for his sass.

El Vaquero's picture

So much for the law being applied to everybody equally.  What?  You mean that it hasn't been for a long time?  Shit!

McMolotov's picture

They're saving that play for the big crash. This dude is being used by the powers-that-be to plant such an idea in the public consciousness.

When the market shits the bed, we'll go to war with someone.

knukles's picture

OBEY
The message is to OBEY
DO NOT QUESTION AUTHORITY .... OBEY

                     back to work, serfs

Headbanger's picture

No,  It's COMPLY

Resistance is futile...

Kirk2NCC1701's picture

Where's a Jack Ruby* to take him out, when you need one?

* Born Jacob Leon Rubenstein, an ex-con, dying of cancer.
BTW, although dying of lung cancer, Ruby died of a Pulmonary Embolism. "Doctor-assisted Factory-Recall"?

You know, the way the mouthy comedian Joan Rivers suddenly died of "medical complications" due to minor surgery -- after her Obama/Michelle remarks (that he's a Homo, she's a Tranny and the kids are adopted)?

/sarc

Grinder74's picture

GUARD: (Into his walkie-talkie) We have a 51-50 in paperbacks. All units respond.

JERRY: '51-50'? That - that's just a scare, right?

GUARD: Sir, I'm gonna have to ask you to stand out of the way and let us handle this. (The Guard rushes toward Uncle Leo Sarao) Swarm! Swarm!

Captain Willard's picture

So now the Brits should demand the extradition of Jamie Dimon for the London Whale fiasco?

This shit works both ways, right? Or does it?

Bay of Pigs's picture

That fact alone proves the entire story is bullshit.

junction's picture

The CFTC got him just ahead of the Nail Gun Squad.  Good work, CFTC!

NotApplicable's picture

CFTC attention is what happens when you don't work for a Too Big To Jail firm. Those places have to nail down all of the loose ends to keep the Feds from looking bad.

Eireann go Brach's picture

So he gets charged with manipulating the DOW down only 900 points via spoofing.

Yet Bernanke is not charged with manipulating the DOW up over 215% via printing?

We fucking deserve that Cankled Cunt Hilary Clintonin as president!

Welcome to America!

samcontrol's picture

i check a little everyday to see if there is talk about the boston b patsy on trial now??

anything?

samcontrol's picture

i check a little everyday to see if there is talk about the boston b patsy on trial now??

anything?

Condition 1SQ's picture

Patsy telling an investigator to "kiss my ass"?  Doubtful.

ZH Snob's picture

there really should be a patsy prison.  it could be a special kind of place where, to make up for using these people, they could have mini fridges, big screen TVs and free wireless in every cell. if the place only housed patsies it would not be filled with the dangerous criminals of a normal prison, and the inmates wouldn't have to be too concerned with being raped and beaten. 

whippet's picture

that's basically what prison here in the UK is like, except there is still the ass rapists of course. 

golden torch's picture

I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing... www.globe-report.com

ParkAveFlasher's picture

Burn the witch!  Burn the witch!

turnoffthewater's picture

She's only a witch if she doesn't burn. But let's see if the theory is true

KnuckleDragger-X's picture

He was given a game to play and a set of rules, he merely gamed the system all the way. This is what's happenning with the HFT's right now except they only put up small sell orders to bend the market instead of large orders......

Cheduba's picture

What he did wrong was that he set his calculator to maths.

("Look around you" humor)