British financial trader, who is battling extradition to the US on 22 counts of fraud and commodity manipulation, must remain in custody

The British financial trader accused of contributing to a multibillion-dollar stock market crash in the US from his parents’ suburban London home, will remain in custody after his appeal to vary his bail conditions was refused.

Navinder Singh Sarao, 36, who is fighting extradition to the US on 22 counts of fraud and commodity manipulation, has been prevented from paying his £5m bail by a worldwide freezing order. He has requested he be freed from Wandsworth prison after his parents provided a £50,000 surety. He denies the charges against him.

However, following a hearing in the high court in London on Wednesday, Mr Justice Cranston ruled: “I accept Mr Summers’ submission [for the US government] that until the applicant demonstrates that he has no access to any funds anywhere, so as to provide reassurance that any court in the world would want, the application is premature.”

Sarao was arrested last month after the US Department of Justice claimed he had made $40m (£27m) by “spoofing” financial markets, using commercially available trading software to place $200m of false trades from his parents’ home in Hounslow, west London.

The Americans said Sarao’s supposed manipulation contributed to the so-called flash crash on 6 May 2010, when the Dow Jones industrial average plunged 600 points in five minutes, creating havoc on Wall Street.

The trader has been remanded in custody for four weeks after his arrest last month, when his bail was set at just over £5m. His lawyers had said Sarao’s trading account contained the funds, but they have since learned that his assets were subject to a freezing order by the US authorities, which made it impossible to produce the money.

James Lewis QC, representing Sarao, told the court it was “impossible and unlawful for [Sarao] to comply with this condition. If it was right in principle to grant bail, it must follow that the conditions of bail [do not make it impossible].”

Lewis argued that Sarao should be freed to await a full hearing on his extradition starting in September, which is expected to last about a year, on the strength of the £50,000 already provided as security by his parents. He also told the court that the trader’s parents had offered to put up their home in Hounslow, on which they have paid the mortgage, as further security.

However, Mark Summers QC, representing the US authorities, told the court that Sarao faced “exceptionally serious allegations” and had “lied” to financial regulators when he claimed to be operating with “basic trading software”. He added that Sarao faced a lengthy prison sentence in the US if extradited and convicted, as well as the disgorgement of the alleged $40m in profits.

“This is a man with every reason to avoid that prospect,” he said. “He is a man whose attitude to all of this should give the court no comfort at all. When regulators and the stock exchange asked him about his activities he lied about using tailored software to undertake his activities.”



Summers added that the scale of Sarao’s alleged profits meant that the “idea that he couldn’t compensate his parents [if he skipped bail] is unrealistic.”

Sarao’s lawyers said the judge had “left the door slightly ajar” for them to return to court after providing further information on Sarao’s assets.