How Sarao 'spoofed, layered' his way to $1-mln flash crash gain

April 21, 2015 9:22 PM

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SAN FRANCISCO, April 21 (Reuters) - To generate $40 million in gains over a period of four years, including nearly $1 million in the May 2010 U.S. stocks "flash crash," Navinder Singh Sarao used a couple of fairly simple techniques that let him push futures prices down, buy the contracts on the cheap, and then profit from the sale.

Sarao never intended to make good on the orders, a criminal complaint unsealed Tuesday said; the point was to create the false impression of a large supply of contracts just waiting to be sold should the price rise just a bit, an impression that exerted a steady downward pressure on prices.

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