How a trillion dollars can vanish in a matter of minute

New ways to crash the market

Five years ago, on the afternoon of May 6, 2010, the Dow and the S. & P. fell more than six per cent in a matter of minutes, losing a trillion dollars in value. The “flash crash,” as it came to be known, terrified investors: it was huge, it was fast, and it made absolutely no sense. Nothing happening in the real world that day, a few market jitters aside, could explain the plunge, and the market recovered almost as quickly as it had fallen. Now prosecutors claim that they’ve found a culprit: a London-based trader, Navinder Sarao, who may be extradited to the U.S. to face charges of market manipulation. Sarao is hardly your idea of a devious financial mastermind. He’s a thirty-six-year-old private investor who often made his trades from his bedroom, in his parents’ modest suburban house. ….[READ]

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