Navinder Sarao was sentenced to one-year home confinement in connection with his guilty plea to criminal charges previously brought against him by the Department of Justice for allegedly engaging in manipulative conduct through spoofing-type activity involving E-mini S&P futures contracts traded on the Chicago Mercantile Exchange between April 2010 and April 2015, including illicit trading that purportedly contributed to the May 6, 2010, “Flash Crash.” (Click here for background in the article “Alleged Flash Crash Spoofer Pleads Guilty to Criminal Charges and Agrees to Resolve CFTC Civil Complaint by Paying Over $38.6 Million in Penalties” in the November 13, 2016 edition of Bridging the Week.)
Both defendant’s counsel’s and the DOJ’s recommendation that Mr. Sarao solely be sentenced to time previously served was rejected by the presiding federal court judge, the Hon. Virginia Kendall. Defendant’s counsel had recommended such sentence based on his observations regarding Mr. Sarao’s autism. According to papers he submitted, Mr. Sarao knew that spoofing was wrong, but he was obsessed by spotting spoofing occurring constantly at the CME. When he believed the exchange failed to take action, despite him complaining “over and over …for months,” Mr. Sarao “began to do what he complained about.” Mr. Sarao’s counsel said that the defendant essentially saw trading on CME as a video game and has fully cooperated with the DOJ to explain markets and how his former “opponents” are allegedly cheating on them.