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/ThugstinSwagburn]

This reads like he was just using the free market and the corporations in charge didn't like they where losing in the free market to him.

The one time that capitalism works for the average man, he goes to jail.

[u/guri256 → u/ThugstinSwagburn]

Here’s an analogy that might be easier to understand. Let’s say that you are a car dealership, and you list an ad offering 10 really nice cars for half the market price. Then you decide 15 minutes later to change their price.

You knew that no one would be able to get to the dealership in 10 minutes to take advantage of the price. What you did was intentional false advertising to get people to come to your dealership.

This is technically capitalism, but it’s also illegal. And there’s a good reason it’s illegal.

He did kind of the same thing. He put a bunch of stock up for sale at an unreasonably low price, and then intentionally canceled the sale before other people have the milliseconds needed to finish buying it. He did this to manipulate the market price. This is also technically capitalism, and also definitely illegal.

If he had just decided to sell some stocks at a low price and then changed his mind later, that would’ve been one thing. But this was scripted and timed. He knew that he would be taking them off the market before anyone could buy them before he even put them on the market. Just like the hypothetical car salesman knew he would change the price before he advertised the lower price.

[u/Cpt_Soaps → u/guri256]

makes much more sense now

[u/melatone5 → u/guri256]

It's not quite right. He put large orders up for sale at a slightly higher price than what it was trading at thereby fooling traders and algo systems into thinking that there is more selling pressure than there really is, thereby causing increased selling and profiting from shorting that

[u/delleh → u/guri256]

This is not how the futures or stock market works. If you cross the spread you're getting filled.

[u/bheltz → u/delleh]

So who’s right here? No knowledge to confirm or deny either of your points