The high-frequency futures trader found guilty of contributing to the stock market "flash crash" of May 2010 has been sentenced in a Chicago court to one year of home detention.
Navinder Singh Sarao, a stock trader who operated out of his bedroom in Hounslow, west London, wreaked havoc in markets when his fake trades helped trigger a sudden $1 trillion stock market crash. The crash in value across the major indexes lasted 36 minutes.
Sarao was charged by the U.S. Justice Department accused of wire fraud, commodities fraud and manipulation, as well as a count of "spoofing" — when a trader places thousands of buy offers with the intent of immediately canceling or changing them before execution.
The fabrication of sudden market activity created a momentum in price that Sarao was able to profit from.
In May 2014, a CFTC (Commodity Futures Trading Commission) report concluded that Sarao did not cause the crash but helped contribute by "demanding immediacy ahead of other market participants."
Despite facing as much as eight years in prison, on Tuesday the Federal Judge Virginia Kendall sentenced Sarao — who suffers from severe Asperger's — to just one year of supervised release.
Court documents submitted by Sarao's legal team described him as a "singularly sunny, childlike, guileless, trusting person," who lived off social security payments and played hour after hour of video games in his childhood bedroom.
Sarao, who spent four months in the U.K.'s Wandsworth Prison before his extradition to the United States, has forfeited about $7.6 million in gains made from trading.
U.S. authorities claimed Sarao made more than $70 million between 2009 and 2014 from his bedroom — much of it legal. However, it has been reported that he has lost almost all of his money after investing in fraudulent scams.
His attorneys argued that money was never his motivation but he had an ongoing fascination with markets as a "sophisticated video game."