The high-frequency futures trader who stands accused of contributing to the stock market "flash crash" in May 2010 failed to get his bail conditions reduced Wednesday, and remains in custody.
Judge Ross Cranston told London's High Court that Navinder Singh Sarao posed a "clear flight risk" and refused the application made by Sarao's lawyer, James Lewis.
Sarao has been charged by the U.S. Justice Department. He stands accused of wire fraud, commodities fraud and manipulation, and one count of "spoofing"—when a trader places a bid or offer with the intent of cancelling it before execution.
At an initial hearing in London on April 22, Sarao said he planned to fight extradition to the U.S. and was granted conditional bail by Westminster Magistrates' Court, which was set at £5 million ($7.5 million).
At the time his family members paid a surety of £50,000, but the £5 million payment has yet to be met, and his lawyer argued that U.S. authorities have frozen his assets worldwide.
Two requests to lower the bail surety have now been rejected - the first on May 6 and the second on Wednesday.
'Impossible and unlawful'
Lewis told the court Wednesday that it would be "impossible and unlawful" for Sarao to comply with the bail order due to the restraining order from the U.S. authorities and said it would be "unjust" for him to remain in custody.
He added that it was fairly certain that U.K. court proceedings would not be completed this year and said that "politicization" of the matter could make it last up to a year.
Sarao's parents even offered to use the family home as an extra security on Wednesday, but this was flatly rejected by the judge. Cranston said the current amount of £50,000 was not a "substantial reassure" that the applicant would not flee the country.
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The prosecuting lawyer spoke of Sarao being able to fly to a jurisdiction outside of the reach of the U.S. and claimed that Sarao still had $40 million of "illegal profits" from the alleged wrongdoing.
They added that Sarao had no children, no car and no real ties to the U.K. and said that the £50,00 already paid was "derisible."
In one possible reprieve for Sarao, the judge added that an application to vary the bail terms could be considered if Saroa could prove that he didn't have access to the $40 million of alleged profits.
Richard Egan, a solicitor acting on behalf of Sarao, told reporters after the hearing that this was ray of hope for his client. "The door has been left slightly ajar," he said.
"We'll have to go away and look at that," he added, but said the ruling had left the family "disappointed."
A full hearing will take place in September, and will determine whether Sarao will be handed over to U.S. authorities to stand trial in America.
The U.S. Department of Justice alleges that Sarao, "used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts (E-Minis) on the Chicago Mercantile Exchange (CME)."
Sarao's alleged manipulation of those futures tied to the Standard & Poor's 500 Index "earned him significant profits and contributed to a major drop in the U.S. stock market on May 6, 2010, that came to be known as the 'Flash Crash'," the Justice Department said in a release in April.
Prosecuting lawyers on Wednesday noted that Sarao faces a lengthy jail term if failed guilty of the accusations.