Flash Crash audiobook cover - A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History

Flash Crash

A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History

Liam Vaughan

★ 4.4 / 5(80 ratings)
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Categories:
EconomicsBiography & Memoir

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Flash Crash
The Event (May 6, 2010)+
Navinder Sarao+
High-Frequency Trading (HFT)+
The Spoofing Strategy+
Investigation & Arrest+
Aftermath & Legacy+

Quiz — Test Your Understanding

Question 1 of 7
What was the defining characteristic of the 'Flash Crash' of May 6, 2010?
  • A. A slow, prolonged economic recession that lasted for several months.
  • B. A massive, rapid drop in the global financial markets that occurred in just minutes.
  • C. A targeted cyberattack by a foreign government on the US banking system.
  • D. The permanent bankruptcy of hundreds of major international tech companies.
Question 2 of 7
Who was Navinder Singh Sarao, the primary suspect in the Flash Crash?
  • A. A high-profile Wall Street hedge fund manager.
  • B. A rogue algorithm designed by a major bank that went out of control.
  • C. A mathematically gifted independent trader operating from his childhood bedroom.
  • D. An anonymous Chicago-based whistleblower known only as 'Mr. X'.
Question 3 of 7
Why did Navinder Sarao feel the need to change his trading strategy around 2007?
  • A. He was losing money due to the fallout from the 2008 global financial crisis.
  • B. He was fired from his trading firm and had to start from scratch.
  • C. High-frequency trading (HFT) algorithms were reacting faster than he could, making the market feel rigged against him.
  • D. The government introduced new taxes on manual trading, making his old methods unprofitable.
Question 4 of 7
What is 'spoofing,' the tactic Navinder Sarao used to outsmart high-frequency trading algorithms?
  • A. Hacking directly into the stock exchange's servers to alter asset prices.
  • B. Misleading other traders by placing large orders to influence prices, then withdrawing them before execution.
  • C. Spreading false rumors about companies on internet message boards to drive down their stock price.
  • D. Buying assets in one market and simultaneously selling them in another to profit from tiny price differences.
Question 5 of 7
How was Navinder Sarao eventually tracked down as a suspect in the Flash Crash?
  • A. He publicly bragged about his massive profits and involvement in an interview.
  • B. His former employer, Futex, reported his suspicious software to the authorities.
  • C. An anonymous trader known as 'Mr. X' analyzed market data and presented a case to the authorities.
  • D. The FBI traced a massive transfer of funds from the Chicago Mercantile Exchange to a London bank account.
Question 6 of 7
Why did the Chicago judge give Navinder Sarao a relatively lenient sentence of one year under house arrest?
  • A. He was found completely innocent of manipulating the markets.
  • B. He agreed to donate all of his trading profits to a victims' compensation fund.
  • C. The judge determined he was acting under the orders of a larger financial institution.
  • D. He cooperated extensively with US authorities to help them understand his methods and identify future malpractice.
Question 7 of 7
According to hedge fund manager John Arnold, why might spoofing actually have been a necessary practice at the time?
  • A. It provided a counterbalance to the damaging behavior of high-frequency trading algorithms.
  • B. It generated more tax revenue for governments struggling after the 2008 financial crisis.
  • C. It allowed ordinary, working-class people to safely invest their retirement funds.
  • D. It was the only way to expose corrupt politicians who were engaging in insider trading.

Flash Crash — Full Chapter Overview

Flash Crash Summary & Overview

Flash Crash (2020) tells the story of the “Hound of Hounslow,” Navinder Singh Sarao, a British man accused of triggering the sudden and dramatic stock market crash of 2010. This is a detailed and fast-paced tale of global fraud and quixotic dreams.

Who Should Listen to Flash Crash?

  • Those with an interest in financial fraud and daring swindles 
  • Fans of gripping investigative journalism
  • Anyone who follows global finance

About the Author: Liam Vaughan

Liam Vaughan is an investigative reporter who writes for Bloomberg News and Bloomberg Businessweek in London. He was awarded the Harold Wincott Prize for the best financial journalism in 2013 as part of the Bloomberg team, and a Gerald Loeb Award for excellence in business journalism in 2014.

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