Trader Arrested In Britain Over Alleged Flash Crash Role

MarketWatch Pulse

A futures trader was arrested in Britain on Tuesday over allegations of manipulating the stock market in connection with the May 2010 flash crash, the Justice Department said. The U.S. says Navinder Singh Sarao used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts on the Chicago Mercantile Exchange. By allegedly placing multiple, simultaneous, large-volume sell orders at different price points-a technique known as "layering"-Sarao created the appearance of substantial supply in the market. During the flash crash, the Dow Jones Industrial Average fell by approximately 600 points in a five-minute span, following a drop in the price of E-Minis.

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