Accused British 'Flash Crash' Stock Trader To Be Extradited To The US (zerohedge.com) 209
Slashdot reader whoever57 writes: Navinder Sarao has lost his appeal and is set to be extradited to the USA, where he faces charges with a possible maximum sentence of 380 years. He is accused of causing the "flash crash" in 2010, when the Dow Jones index dropped by 1000 points.
He ran his trading from his bedroom in his parents' house and it is claimed that he made more than 30 million pounds (approximately $40 million) in five years. His parents had no idea what he was doing, nor the scale of his income. He is accused of placing trades that he never intended to fill, so, to this naive person, it's hard to distinguish what he did from the large high-speed trading firms.
"Lawyers for Mr Sarao tried to argue that the U.S. crime of spoofing had no equivalent under English law, meaning he could not be sent for trial overseas," reports The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail.
He ran his trading from his bedroom in his parents' house and it is claimed that he made more than 30 million pounds (approximately $40 million) in five years. His parents had no idea what he was doing, nor the scale of his income. He is accused of placing trades that he never intended to fill, so, to this naive person, it's hard to distinguish what he did from the large high-speed trading firms.
"Lawyers for Mr Sarao tried to argue that the U.S. crime of spoofing had no equivalent under English law, meaning he could not be sent for trial overseas," reports The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail.
Fucking Yanks, world police. (Score:1, Interesting)
C'mon Musk, get that Mars train running so all you fuckwit Yanks can fuck off and leave the rest of us alone.
Re:Fucking Yanks, world police. (Score:5, Informative)
C'mon Musk, get that Mars train running so all you fuckwit Yanks can fuck off and leave the rest of us alone.
Although I agree that generally the U.S. does tend to throw its weight around a little too much over the world, this case isn't a good example. The accused here was trading on U.S. markets. He may have been physically located in the U.K. at the time, but his actions took place in the U.S. It is fully appropriate that he stand trial in the U.S.
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That's different. Americans are imbued by their creator with certain inalienable rights, one of which is that they can break other countries' laws with impunity because NUMBER ONE!
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The longest-lived empires are those who are well enough defended that their neighbours leave them alone - but do NOT engage in conquests but, rather, leave their neighbours alone in turn.
That's how the Mayan's managed to build an empire that lasted for 3000 years. Once they consolidated their territory, they stopped. They didn't try to invade and conquer the Aztecs - they just made su
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The United Kingdom fell? When did this happen?
Someone should tell the queen that her empire fell, and the royal navy that they don't exist anymore.
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>The United Kingdom fell?
No. The British Empire fell. What exists today has is something quite different and no more the same empire surviving than the modern city of Rome is the Roman Empire.
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Suppose you posted anti North Korean comments on a North Korean website. Do you think you should be liable for breaking foreign laws of a country you never stepped foot in?
You don't get to pick and choose which laws to obey and which not. Your country either has an extradiction agreement with N.-Korea or not. If yes, you can be extradited for anything that's illegal in both countries. If the country you live in feels otherwise, they can strike "insulting foreign heads of state" off the roster and the issue's solved.
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If the trajectory of your rifle round intentionally caused a bullet cross the border between the US and Canada and inflict damage or loss of life in Canada, then you would have committed an international act of terrorism, or a transnational crime.
I believe you will find that it is against the laws of both the US and Canada to shoot and kill a person, and the two countries have agreements to mutually co-operate with each other to obtain evidence of crime and assure your timely prosecution.
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he could still be arrested for exporting munitions without a permit...
120.17 Export.
(6) A launch vehicle or payload shall not, by reason of the launching of such vehicle, be considered an export for purposes of this subchapter.
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Who ruins a good joke with facts ?
Anyway, I seriously doubt that any judge would deem a bullet from a gun to meet the definition of either 'launch vehicle' or 'payload'.
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he'd have gained an impenetrable presidential aura.
That is usually called the royal aura in this case.
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Like the old joke about the UK simply being a large unsinkable US aircraft carrier.
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When the shit hits the fan, everybody runs to hide behind the US militarily, and everybody, including enemies, runs to hide their money in safe US dollars.
Complaints are akin to your kids being embarrassed you joked with the supermarket cashier.
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When the British open fire, the Germans take cover.
When the Germans open fire, the British take cover.
When the Americans open fire, everybody takes cover.
That dates back to WW2.
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US forces kill more Allies than the conflict does.
Now there's a [citation needed] if I ever saw one.
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Only because the Americans couldn't find it.
Re: Fucking Yanks, world police. (Score:4, Funny)
We we're using Apple Maps, it's not our fault.
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The US goobermint spends more per capita on healthcare than the UK's one.
The UK system covers everybody.
The US system covers veterans, the very old and some of the very poor.
https://en.wikipedia.org/wiki/... [wikipedia.org]
While it's true that some countries don't pull their weight defence wise, it would appear that it's something else that's stopping you having something like the NHS.
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The US goobermint spends more per capita on healthcare than the UK's one.
The UK system covers everybody.
The US system covers veterans, the very old and some of the very poor.
https://en.wikipedia.org/wiki/... [wikipedia.org]
While it's true that some countries don't pull their weight defence wise, it would appear that it's something else that's stopping you having something like the NHS.
Take a look at our political system, and who it puts in charge.
I have a hard time finding a nationally elected US politician that I would be willing to put in charge of the contents of my trash can, let alone anything actually relevant or important.
Especially when looking at the presidential election this year, would you trust *either* of them to actually spend the money on proper health-care instead of using the money to buy votes or line their own pockets?
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Wrong. Look at the link. They've even put them in different colours.
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Presumably that's an overall figure dragged down by the poor who don't get treated until they stagger into ER, where AIUI they can't be turned away. You aren't one of them there corminusts are you?
Look at figures for the richest ten percent to get a true figure for how <blink>awesome</blink> US healthcare is.
It's the same with education. Who cares if half of kids leaving highschool can barely read and write so long as you've got Harvard and MIT?
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Not really. It's more a hands-off role - setting the overall tone, doing oversight.
You should see what I have planned for after the upcoming coronation!
Rediculous (Score:4, Insightful)
"a possible maximum sentence of 380 years."
You don't even get that for murder
Re:Rediculous (Score:5, Insightful)
He decided to color outside of the lines, which was (for some bizarre reason) allowed by the trading system?
Instead of fixing the trading system, the law is going to try to put him in jail for 380 years.
Lesson learned: Never make people look really stupid for not having logical rules against what you are doing. Also, if you make it big in the stock market, know that all eyes will be watching.
Re:Rediculous (Score:5, Insightful)
Re: Rediculous (Score:3)
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Goldman Sachs gives tens upon tens of millions in "donations" to politicians from both US political parties in order to get away with this and worse. If he had taken the time to write out the checks instead of cheating everyone of their cut then this wouldn't be happening to him.
Re:Rediculous (Score:4, Insightful)
"Tech giants have been particularly successful in getting their voices heard. They were originally reluctant to play the lobbying game, but soon realised that was a mistake: Microsoft’s prolonged legal battle with the Department of Justice over whether its was abusing its dominant position in the software market, which was finally settled in 2001, persuaded the whole industry that it pays to have friends in Washington. Since then tech companies have turned into some of America’s most assiduous lobbyists and most enthusiastic employers of Washington insiders." -- The Economist, "Dark Arts", September 17th, 2016 [economist.com]
It was comical, really.
REALLY? (Score:5, Insightful)
The crime is making orders with the intent to cancel before being fulfilled. ... The intent to cancel, in order to create a false market perception, is the crime. ... a pattern of cancelled-while-unfulfilled orders, combined with other orders that profit from the market perception that the unfulfilled orders create, is a very clear establishment of such intent.
Is it also an establishment of intent if you (as a large financial firm) deploy, in actual trading on real markets with real money, an algorithm that exhibits such behavior? If, in addition, you KEEP it deployed even after its behavior is noticed and complained about in public media of the sort likely to be read by trading professionals?
And it is something that the traders at Goldman Sachs can make a fortune without doing.
But it's something that they can make a BIGGER fortune by DOING. And something that can count toward the rise of individuals and groups through the corporate ladder and pay scale.
While don't recall if G.S. was specifically one of the organizations complained about (and am not going to spend the time right now digging through archives to check), I DO recall com"plaints about high-speed traders taking advantage of the cancellation features of the online market engines in just this way.
One of the advantages of shaving milliseconds off the communication delays and algorithms that was specifically mentioned (once the pattern was observed) was the ability to send an order and a cancellation in rapid enough succession that it could not be pounced on (and thus didn't really risk money), sending price signals that tricked competing, slightly less high-speed or well-tuned, algorithms into making other bad trades from which their operators lost and the perpetrators gained.
Re:REALLY? (Score:4, Insightful)
Not perpetrators, opponents. This is a game, and they're playing for money. Just like in Las Vegas, if an individual extracts too much money from the house, he's out of the establishment, or worse, as in this case.
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Not perpetrators, opponents.
Once it's illegal, they're perpetrators. No more or less than con men or burglars.
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My research is only coming up with a rule against financial spoofing encoded in law as of December 2010. In other words, he's being extradited for something that wasn't even a law until six months after he did the thing.
It's bollocks that we normies can't take advantage of features in the stock exchange because they might cause special snowflake trading programs to shit the bed.
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The same banks who did this (http://www.nydailynews.com/news/money/merrill-lynch-ceo-john-thain-resigns-bank-america-bonus-scandal-article-1.421594) would not go near that ? What an odd place to draw your ethical lines.
Remember that's just the most recent case of a bank stealing millions by defrauding the public or it's own customers - there are 5 or 6 such scandals every year. It's a constant refrain. Last year's dirty list included HSBC.
Banks stealing money thr
Re: Rediculous (Score:4, Insightful)
Or rather don't play by the rules unless you're part of the big good old boys club. Peasants need not apply here are your separate rules
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Actually, this is allowed by the trading system because it is used by the large players to defraud the smaller players. It is just not permissible to use it if you are a smaller player, but the possibility is there.
The stock-market is one large organized scam.
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The big guys have turned the stock market into a casino - and they are the house and the house always wins. If you win too much - they house kneecaps you.
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Murder only affects people's lives. This affected company profits, a much more evil crime.
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Worse, it affected their share price.
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Make sure you remember that "it's only money" next time a pension fund is looted. After all, it's not like losing money causes people to experience stress, take more risks with their health/safety to save money, or die before their time. IMO the real problem is that the primary fraudsters (seriously, who thought it was a good idea to let high frequency traders steal a bit each time someone makes a trade?) not only got no jailtime, but get to keep millions.
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Whoosh
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Only the ones who were minorities and/or couldn't afford a good lawyer. Also, it depends on who was killed and the exact circumstances. Texans are totally cool with 2 men getting in a fight and it escalating to murder, they might even plead that one down to manslaughter. If a Texas lawman was killed, or if it was a woman or child, that's a different story.
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IIRC, in Britain in the pas
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Well, it's Texas. Plenty of times a crime that should have been manslaughter gets convicted as murder. There's all kinds of over-convictions on top of convictions of innocent people, and Texas is the worst of them for this kind of thing.
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And as Governor Ted Cruz has informed us - he doesn't CARE what the real innocent-conviction rate is, it has no impact on his love for Texa's record setting execution rate. Even if all the people they kill were innocent he wouldn't consider so much as a stay of executions until the problem is solved - because that's the Christian way right ?
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He meant 10-15 years on death row.
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Whooosh, you dumb cunt.
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His mistake was not spending half his earnings on hookers and blow (which may or may not be code for "secretly buried wads of cash and/or bars of gold at an undisclosed location").
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He committed the crime of embarrassing some pretty important people. The traditional penalty for that is death by torture. As that is obviously barbaric, death in an US prison has been substituted (which may not be that much of an improvement...).
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Murder doesn't involve corporate dollars. I think it's more than obvious that money has a much higher priority than life. Especially money that the rich have spoken for.
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He should be eligible for parole in somewhere over a hundred years.
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Blaming the person not the engineering! (Score:3)
As I said here:
http://www.theregister.co.uk/2... [theregister.co.uk]
blaming the bloke on the other side of the Atlantic when it seems that poor engineering must have been in place even to allow what he did, is like blaming my kids when the curtains come down again (I *know* they need fixing, and have for a while).
Rgds
Damon
Leaving a door unlocked doesn't excuse the thief (Score:3)
It's probably a bad idea to leave your door unlocked. That doesn't excuse the thief who takes advantage of the fact the door was unlocked.
This guy entered thousands and thousands of fraudulent offers, with full intent to reneg on those offers. Fraud isn't okay just because you managed to fool the victim.
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On, it's renege. Two, isn't that what HFT is all about?
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isn't that what HFT is all about?
No. HFT is legitimate buying and selling, just done at high speed. An order goes through, ownership is transferred... everything you'd expect from a legitimate business, just executed very quickly. What's different here is that this guy allegedly posted transaction orders just long enough to affect market prices, then canceling them, capitalizing on the price fluctuations with separate legitimate trades.
Cancelling orders is a protection mechanism for accidentally making stupid orders, like putting an extra
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I thought that when I first read about HFT. Dictum Meum Pactum and all that.
But reading around it seemed that's exactly what they were doing.
One small order to gauge the market, yes (Score:2)
Yes, people will use one small order for the purpose of gauging the market. One order among many has little to no effect.
This guy placed 19,000 large fake orders for the purpose of defrauding the market.
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I couldn't agree more.
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If that door is the door to a nuclear power plant, then the amount of responsibility on the party leaving it open is far bigger than on the party using that mistake. Seriously, missing safety features are gross negligence and should routinely be treated the same as intent. Of course, the same fraud is run by other, very powerful players, so this _is_ intent.
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"when it seems that poor engineering must have been in place"
Should every system be engineered so that it is impossible to game?
Who is lying? (Score:1)
Re:Who is lying? (Score:5, Insightful)
The US froze his assets. That's why he couldn't post bail.
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Re:Who is lying? (Score:4, Insightful)
It does, except when the US tells it not to.
See also: Gary McKinnon, Barclays Five.
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The US froze his assets. That's why he couldn't post bail.
Not true. He had $39 million in a Swiss bank account, which he didn't disclose. After spending a few months in jail, he turned over the account to the US authorities and was released on bail. http://www.bloomberg.com/news/... [bloomberg.com]
Re:Who is lying? (Score:4, Insightful)
There is no such thing in England as having to post bail. You can be released on bail with bail conditions, but you don't have to pay anything, because that idea is fucking stupid and just favours the rich innocent over the poor innocent (and everyone is innocent at this stage), making justice non-blind. Everything about this summary doesn't fit together.
Re:Who is lying? (Score:5, Interesting)
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There is no such thing in England as having to post bail. You can be released on bail with bail conditions, but you don't have to pay anything.
Sigh, why bother posting this when 2 seconds in Google can tell you he had a bail of £5 million set but couldn't pay because his assets were frozen. Not everyone gets set a monetary bail but it happens sometimes.
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There is no such thing in England as having to post bail.
From TFS:
"[...] The Telegraph, adding that he's already spent four months in jail because he didn't have enough money to post his own bail."
Google reports a £5 million bail.
I don't know how it works in the UK, but in most civilized places, "frozen" assets can be used to defend ones self (including posting bail). I guess the UK is no longer a civilized place.
Re: Who is lying? (Score:2)
His real crime (Score:1)
... was not trading under the auspices of an investment bank. The bigger criminals don't like competition.
What? (Score:2)
Also he had a "millisecond advantage" over US traders? Did his transactions travel faster than the speed of light? It just doesn't add up.
Re: What? (Score:2)
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Re:What? (Score:5, Informative)
He used their millisecond advantage against them.
HFTs front run the orders. He puts up a sell order for 1000 shares of stock X for $1.00
before it can execute N HFTs are putting up sell orders at $0.99
This drives actual sellers to $0.95 where he bought , and canceled his sell @$1.00
The HFTs then are no longer front running and the price moves back up to something around $0.98
at which point he sells.
Re:What? (Score:4, Insightful)
So he abused a flaw in the cheating bastards who are doing high frequency trading. Like finding a flaw in the aimbots the cheaters are using in an FPS game and using it to get kills. And they want to jail him for 380 years ("ban him from life") for that.
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Correct.
Really quite simple: fraud, 19,000 times in 10 min (Score:5, Informative)
It's really quite simple - he committed fraud, on a large scale. There's nothing specific to high-frequency trading here, though it was easier for him to fool computer programs that to fool people - humans would have been more likely to notice his that his orders were fraudulent. He could have run the same fraud in 1940, though - he just would have been more likely to get caught sooner.
He would find a stock selling for $1.20. He would then place thousands and thousands of orders saying "I'd like to sell this stock for $1". Of course, nobody would then be offering to buy for $1.20, since he said he was selling for $1. He drove the price down with his sell orders. Then he'd cancel those thousands of sell orders, essentially saying "nope, I was lying, I won't really sell for $1". In the meantime, while the price was down due to his bogus offers to sell, he'd buy at $1.05 or whatever. As soon as it was found out that his thousands of sell orders were bogus, the price would go back up to about $1.20, where it belonged. He had bought a $1.20 stock for $1.05 buying fraudulently offering to sell at $1, thousands of times, with no intention of actually doing so.
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If the order system let him make the offer, and didn't enforce it by making him pay for it, how is it fraud? Why didn't the trading system just ban his account the first time or first day he did this? Why does the ability to cancel a trade exist at all? Shouldn't the trading process be :
1. Wire the money or at least electronically commit the funds in a brokerage account to the trade
2. Send the buy or sell order once the money to support the trade is there
3. Transfer the stock between brokerage account
Ps you can run exact same scam on eBay or Craigsli (Score:2)
Ps people can run the exact same scam on eBay "selling" popular items like iPhones or hard drives, or in some cities on Craigslist. It really has nothing to do with high frequency trading or even with stocks. The only requirement is a marketplace where you can advertise a very low price and string buyers along long enough for real sellers to get discouraged about lack of buyers and reduce their price a bit.
Suppose each day on eBay 20 new iphones are sold, at just about $600 each. Sellers know that every
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But ebay would (or at least should) catch you if you did that a bunch of times. If they allowed someone to commit that transaction thousands of times then it'd seriously undermine the entire platform.
And the stock markets now have systems to catch it (Score:2)
> But ebay would (or at least should) catch you if you did that a bunch of times.
I suspect eBay would catch you after a while UNLESS you were clever. Certainly there are ways to set up a new eBay account under a new identity, I've done that. All you need is a different email address and maybe a new prepaid Visa. I have one eBay account for business-related transactions and one for personal. A clever person could probably find a way to keep setting up new accounts as old ones got locked.
> If they
He did it six years, rhousands of times, admitted (Score:2)
> To me it is pretty clear that he put in the sell order, then realised he had made a mistake (perhaps a computer error) and withdrew the order before it was fulfilled.
He did it for SIX YEARS , thousands of times. He admits what he didb. His defense is essentially "there's no law against commiting fraud extremely quickly." There IS a law against comitting fraud . Doing it quickly doesn't make it legal.
No, that would mean prices couldn't change (Score:2)
> The price of a stock is the price at which the last transaction took place.
Suppose a stock was last traded at $10. Does that mean if I want to sell the stock NOW, it'll necesarily sell for $10? Which then becomes the new "last transaction", so that stock permanently buys and sells for $10?
No, there are two CURRENT prices for a stock right now. There's the price someone is offering to sell it for, and the price someone is offering to buy it. These are called "ask" and "bid".
Suppose there are 1,000
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To understand why some other trader's pricing algorithm doesn't really matter, see this explanation of how you can run the exact same scam on ebay:
https://slashdot.org/comments.... [slashdot.org]
Everybody got screwed, not just HFT traders (Score:2)
It really, really has nothing to do with high frequency traders. Lots of people got screwed. Michael McCarthy is a typical example:
https://www.thestreet.com/stor... [thestreet.com]
As I've explained in another post, people can run the exact same scam on eBay with iPhones, or "selling" F-150 pickups on Craigslist.
What's the Good of High-Frequency Trading? (Score:2)
He used their millisecond advantage against them.
What if all trades were batched up and handled on something like one-second boundaries, i.e., kill off high-frequency trading? What would be lost? As far as I can tell, almost all of its effect so far has been to advantage the high end traders who have the resources to compete. There would also seem to be substantial risks of instability. Since the traders are free to use any algorithm they like there's no way to guarantee the stability of the whole system.
Little guy not allowed to play with big crooks (Score:2, Informative)
Once again we see an individual attempting to do something which attracts criminal charges... unless they're in the right club. Do I see any bankers getting charged for any of the criminal dealings that led to all the bank collapses ? No. Unless it's Iceland who seem to a) have balls and b) still actually govern themselves.
And once again we see that the UK is no longer a sovereign country but is simply a fiefdom of the corporate USA oligarchies.
If a UK citizen has committed a crime on UK soil they should
Wait (Score:2)
He made 40-million in a few months but he couldn't afford bail ? Must be a graduate of Trump university.
(Seriously - his accounts are probably frozen as is common in financial crimes prosecution - but this is not usually allowed to interfere with bail).
Re:There is no such thing as "English" law (Score:5, Informative)
Wrong, "English law" refers to the legal system of common law in England and Wales (and that is known as English Law) - Scotland has its own legal system (Scots Law), as does Northern Ireland.
Neither the United Kingdom nor Britain has a single legal system.
The quote is perfectly accurate.