Bro cashed out way too much

[u/be_you_tiful-]

A man working from his parents' house in West London made tens of millions of dollars trading futures from a bedroom filled with stuffed toys. His name is Navinder Singh Sarao, and he's on the autism spectrum.

There was no Wall Street trading floor. Sarao worked out of the family home in Hounslow, using a customized trading program on an ordinary desktop computer, and by most accounts he lived a pretty quiet life.

Then came May 6, 2010. In a matter of minutes, US stock markets plunged, and nearly $1 trillion in value briefly vanished before prices bounced back. It became known as the Flash Crash.

Years later, US authorities said Sarao's spoofing helped make it worse. Prosecutors said he placed large sell orders he never intended to fill, then canceled them, which pushed prices down so he could profit from the swings. They said his strategy was running on the day of the crash, and that he made more than $40 million from this kind of trading over several years.

Sarao fought extradition from the UK for years. He eventually pleaded guilty to wire fraud and spoofing in the US. His lawyers pointed to his autism, and the judge sentenced him to time served followed by home confinement rather than more prison time, citing his cooperation with prosecutors.

[u/DonkeyFries → u/[deleted]]

Let me make sure I understand what you are saying.

There are algorithms that make trades incredibly quickly, in milliseconds, far faster than any human could actually make trades that are in any way legitimate. And there are other algorithms that detect trades far faster than any human could, or, you know, faster than the reality of demand. And someone used this system that someone else established to manipulate the price. Because it’s bad when a lowly peon games the system but fine when established interests do.

Or am I not understanding something?

[u/McLamb_A → u/DonkeyFries]

That's exactly right. The large brokerage firms are "too big to fail". So when something bad happens with the markets, they're the first to cash out leaving the rest of us holding the bag.

[u/drewster23 → u/McLamb_A]

Except that's not what this is about.

It's about the specific illegal method, not just "getting rich".

You can say the same thing about insider trading but people even rich people do go go jail for it....

[u/McLamb_A → u/drewster23]

True. My point was that those firms use the instant trading to legally beat the rest of us when things happen. They almost never lose while the common folks lose their shirts.