Several weeks ago, when the CFTC and DOJ's laughable attempt to scapegoat the May 2010 flash crash on the actions of a live-in-his-parents-basement UK trader, we explained "Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The "Mass Manipulation Of High Frequency Nerds [4]."
It now turns out that he not only threatened to expose the real market manipulators, but he acctually did it. More than 100 times.
Navinder Singh Sarao, the trader arrested last month on U.S. charges he manipulated futures prices and contributed to the May 2010 “flash crash,” leveled claims of similar misconduct against other traders before his arrest.
Mr. Sarao complained to the Chicago Mercantile Exchange, where he traded futures contracts, more than 100 times over the past several years about traders he believed were engaging in manipulative conduct, people familiar with the matter said.
His last complaint came just weeks before he was arrested on Justice Department charges, one of the people said.
Who are the real manipulators, we ask rhetorically:
Previously released documents have shown Mr. Sarao urging exchanges to target high-frequency trading practices he viewed as manipulative, but the frequency and extent of his complaints weren’t known. His complaints underscore the extent to which Mr. Sarao viewed his own trading as a legitimate counter to other high-speed traders.
Mr. Sarao appears to have filed an unusually large volume of complaints. “That would be considered a high number,” said Ray Cahnman, a longtime futures trader and chairman of the proprietary trading firm Transmarket Group LLC. “Most people would break down before they get to 100 because they realize the complaints aren’t going anywhere,” he said.
Sarao's complaints got him somewhere: straight to prison. And now we know why.
As for Sarao's complaints going anywhere else: fear not, they will - just as soon as the market crashes. Because not only will the next market crash be epic, it will be blamed entirely on the same HFTs that for the past 7 years worked in tandem with the central banks - the source of all capital misallocation decisions - in the creation of the biggest asset bubble of all time.
