UK court dents accused 'flash crash' trader's hopes of release
By Michael Holden LONDON (Reuters) - The British trader fighting extradition to the United States after being accused of helping trigger the 2010 Wall Street "flash crash" faces months in custody after London's High Court refused to remove a 5 million-pound surety bail condition. Navinder Sarao, 36, was arrested by British police on a U.S extradition warrant a month ago after being charged with wire fraud, commodities fraud and market manipulation by the U.S. Justice Department. The U.S. authorities accuse him of playing a part in the Wall Street flash crash on May 6, 2010, in which about $1 trillion in market value was wiped out in a matter of minutes before the stock exchange recovered. Sarao, who has said he did nothing wrong and was just good at his job, has been in custody for four weeks after failing to produce 5 million pounds ($7.6 million), held in a trading account with broker RJ O'Brien in the United States, as bail security. However, his attempt to have that condition removed at the High Court failed on Wednesday. "There's a clear flight risk," judge Ross Cranston said. James Lewis, the lawyer for Sarao who was not in court, had earlier said it would be both unlawful and impossible for his client to produce the money because of a worldwide freezing order on his assets imposed by U.S. authorities. He argued that 50,000 pounds of life savings offered as security by his parents and brother, who were present to hear the application, was sufficient, and that the 5 million pound security effectively amounted to a denial of bail. The amount demanded exceeded the security imposed in extradition cases involving Russian oligarchs, Lewis said, citing the case of the late Boris Beresovsky who only had to stump up 100,000 pounds. The court was told Sarao, who is currently held in Wandsworth prison in southwest London, came from a tight-knit family and had lived in the same house with his parents all his life. "He doesn't even have a car," Lewis said. The lawyer added it was "manifestly unjust" that Sarao should stay in custody as it was "fairly certain proceedings will not conclude this year", saying there would be arguments that Sarao was being "used as a scapegoat for the stockmarket crash". Mark Summers, acting on behalf of the United States government, said Sarao was a "quintessential flight risk" as he faced lengthy jail terms if convicted, and had previously lied to regulators and the stock exchange about using customised software for his trading. "The defendant faces trial in America on exceptionally serious allegations," he said. He dismissed the 50,000 pound offer as "derisory" and small change "when considering the reality of a man who America says is sitting on $40 million profits". He said Sarao would need to disclose the whereabouts of $40 million of "illegal profits" or prove he had no other money before the bail surety could be lowered. Another Sarao lawyer, Richard Egan, told reporters after the hearing: "We are very disappointed by this decision." He said the court had held out the hope that if they could prove he had no other funds available the decision could be changed. (Editing by Toby Chopra)
