Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History
The riveting story of a trading prodigy who amassed $70 million from his childhood bedroom—until the US government accused him of helping trigger an unprecedented market collapse
On May 6, 2010, financial markets around the world tumbled simultaneously and without warning. In the span of five minutes, a trillion dollars of valuation was lost. The Flash Crash, as it became known, represented what was then the fastest drop in market history. When share values rebounded less than half an hour later, experts around the globe were left perplexed. What had they just witnessed?
Navinder Singh Sarao hardly seemed like a man who would shake the world’s financial markets to their core. Raised in a working-class neighborhood in West London, Nav was a preternaturally gifted trader who played the markets like a computer game. By the age of thirty, he had left behind London’s “trading arcades,” working instead of out of his childhood home. For years the money poured in. But when lightning-fast electronic traders infiltrated markets and started eating into his profits, Nav built a system of his own to fight back. It worked—until 2015 when the FBI arrived at his door. Depending on whom you ask, Sarao was a scourge, a symbol of a financial system run horribly amok, or a folk hero who took on the tyranny of Wall Street and the high-frequency traders.
A real-life financial thriller, Flash Crash uncovers the remarkable, behind-the-scenes narrative of a mystifying market crash, a globe-spanning investigation into international fraud, and a man at the center of them both.
About the author:
LIAM VAUGHAN is an investigative journalist for Bloomberg and Bloomberg Businessweek. He has been awarded the Gerald Loeb prize for excellence in business journalism and the Harold Wincott prize for financial journalism. He is co-author of The Fix: How Bankers Lied, Cheated and Colluded to Rig the World’s Most Important Number. He lives in London.
Reviews about the ebook:
- Lily Herman:
Ah, there’s no better time to read an ebook that examines many problems with late-stage capitalism than during a pandemic being made worse by late-stage capitalism!!!!Liam Vaughan’s Flash Crash is an immersive look at how a sloppy stew of bureaucratic fuckery, financial greed, unchecked wealth and privilege, and unbridled technocratic optimism all coalesced at the same time to create the perfect conditions for day trader Navinder Singh Sarao to perpetuate the flash crash of 2010.
Vaughn does an impactful job showing the many sides of the debate surrounding Sarao’s case. Is he a hero, a criminal, a conspiracy theorist, an arrogant libertarian, or all of the above? And are ~the markets~ even a good thing? At the center, however, is the important question of why Sarao, who was an outlier in the industry in more ways than one, became the person who paid the price, as opposed to folks who had far bigger roles in creating the problems with banking, trading, and financial regulation.
Flash Crash has got some sections that get pretty technical, but Vaughan does a solid job working through terminology and showing how so many moving parts fit together. It may be of particular interest to fans of Michael Lewis’ books (especially Flash Boys and The Big Short) as well as more atmospheric non-fiction reads like John Carreyrou’s Bad Blood and Nick Bilton’s American Kingpin.
- David Wineberg:
Too crazy not to be trueFinancial investigative journalist Liam Vaughan seems to have had the time of his life putting together Flash Crash. But then, the story is so rich with characters and so bizarre in its nature, that as he admits at the end – someone had to write a book on it. It is a case of truth stranger than fiction. Those cost investors billions, one memorable spring day.
The Flash Crash was an afternoon in 2010 when the financial markets suddenly melted into almost nothing, then bounced back to almost where they started that morning. For a short time (minutes!), shares of major corporations traded for a penny or less, while others shot to $100,000 a share. Blame was needed, and investigations led to a Kansas City financial house which put in a huge sell order, rather inexpertly. But things are never that simple. In this case, it transpired that a single man, working from the edge of his bed in his parents’ house in Hounslow outside London, was manipulating the markets, abusing the system until it broke.
Navinder Sarao was in his early thirties and unemployed. He still lived with his parents and spent his weekdays playing the S&P futures for all they were worth, and more. He would routinely place trades worth billions of dollars, canceling most of them, and walking away with six figures of pure profit for half a day’s work.