Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 1 of 27 PageID #:562 

UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS, 

EASTERN DIVISION 

) 

U.S. COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

v. 

NAV SARAO FUTURES LIMITED PLC AND 

NA VmJ>ER SINGH SARAO, 

Defendants. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

~~~~~~~~~~~~~~~~~) 

Case No. 15-cv-3398 

Hon. Andrea R. Wood 

[PROPOSED] CONSENT ORDER OF PERMAMENT 

INJUNCTION, CIVIL MONETARY PENALTY, AND OTHER EQUITABLE RELIEF 

AGAINST NA VINDER SINGH SARAO 

I. INTRODUCTION 

On April 17, 2015, Plaintiff U.S. Commodity Futures Trading Commission (the 

Commission or CFTC) filed its Complaint for Injunctive Relief, Civil Monetary Penalties and 

Other Equitable Relief (Complaint) against Nav Sarao Futures Limited PLC (Sarao Futures) an 

Navinder Singh Sarao (Sarao)· (collectively, Defendants) (Dkt. #1) for violations of Sections 

4c(a)(5)(C), 6(c)(l) and (3),1 and 9(a)(2) of the Commodity Exchange Act (Act), 7 U.S.C. 

§§ 6c(a)(5)(C), 9(1) & (3), and 13(a)(2) (2012), and Commission Regulations (Regulations) 

180.l and 180.2, 17 C.F.R. § 180.2 (2014). Simultaneously, Plaintiff filed an ex parte Motion . 

for Statutory Restraining Order and Preliminary Injunction seeking, among other things, an order 

prohibiting Defendants from withdrawing or dissipating funds and assets, granting Plaintiff 

access to Defendants' books and records, and requiting Defendants to appear and show cause 

1 Section 6(c)(l) and (3) of the Act became effective on August 15, 2011. Prior to that date, Defendants' conduct

violated Section 6(c) of the Act, 7 U.S.C. §§ 9, 15 (2008). 

1 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 2 of 27 PageID #:563 

why a preliminary injunction should not be issued against them. (Dkt. # 7). That same day, this 

Court issued an order granting the ex parte relief requested by Plaintiff. (Dkt. # 13). 

On June 29, 2015, the Court entered a Consent Preliminary Injunction that, among other 

things, prohibited Sarao from trading on or subject to the rules of any registered entity (as that 

term is defined in Section la(40) of the Act, 7 U.S.C. § la(40) (2012)) or from entering into any 

. transactions involving "commodity interests" (as that term is defined in Regulation l .3(yy), 17 

C.F.R. § l.3(yy) (2014)) and modified this Court's previously issued asset freeze. (Dkt. # 46). 

·On August 12, 2015, this Court entered a Default Order of Preliminary Injunction against Sarao 

Futures, imposing similar preliminary relief. (Dkt. # 55). 

II. CONSENTS AND AGREEMENTS 

To effect settlement of all charges alleged in the Complaint against Sarao without a trial 

on the merits or any further judicial proceedings, Sarao: 

I. Consents to the entry of this Consent Order for Permanent Injunction, Civil 

Monetary Penalty and Other Equitable Relief Against Navinder Singh Sarao (Consent Order); 

2. Affirms that he has read and agreed to this Consent Order voluntarily, and that no 

promise, other than as specifically contained herein, or threat, has been made by the Commission 

or any member, officer, agent or representative thereof, or by any other person, to induce consent 

to this Consent Order; 

3. Acknowledges service of the summons and Complaint; 

4. Admits the jurisdiction of this Court over him and the subject matter of this action 

pursuant to Section 6c of the Act, as amended, 7 U.S.C. § 13a-1 (2012); 

5. Admits the jurisdiction of the Commission over the conduct and transactions at 

issue in this action pursuant to the Act, 7 U.S.C. § 13a-1 (2012); 

2 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 3 of 27 PageID #:564 

6. Admits that venue properly lies with this Court pursuant to Section 6c( e) of the 

Act, as amended, 7 U.S.C. § 13a-l(e) (2012); 

7. Waives: 

(a) any and all claims that he may possess under the Equal Access to Justice 

Act, 5 U.S.C. § 504 (2012) and 28 U.S.C. § 2412 (2012), and/or the rules 

promulgated by the Commission in conformity therewith, Part 148 of the 

Regulations, 17 C.F.R. §§ 148.l et seq. (2014), relating to, or arising from, 

this action; 

(b) any and all claims that he may possess under the Small Business 

Regulatory Enforcement Fairness Act of 1996, Pub. L. No. ·104-121, §§ 

201-253, 110 Stat. 847, 857-868 (1996), as amended by Pub. L. No. 110-

28, § 8302, 121 Stat. 112, 204-205 (2007), relating to, or arising from, this 

action; 

(c) any claim of Double Jeopardy based upon the institution of this action or 

the entry in this action of any order imposing a civil monetary penalty or 

any other relief, including this Consent Order; and 

( d) any and all rights of appeal from this action. 

8. Consents to the continued jurisdiction of this Court over him for the purpose of 

implementing and enforcing the terms and conditions of the Consent Order and for ariy other 

purpose relevant to this action, even if he now or in the future resides outside the jurisdiction of 

this Court; 

9. Agrees that he will not oppose enforcement of this Consent Order on the ground, 

if any exists, that it fails to comply with Rule 65( d) of the Federal Rules of Civil Procedure and 

waives any objection based thereon; 

10. · Agrees that neither he nor any of his agents or employees under his authority or 

control shall take any action or make any public statement denying, directly or indirectly, any 

allegation in the Complaint or the Findings of Fact or Conclusions of Law in this Consent Order,

or creating or tending to create the impression that the Complaint and/or this Consent Order is 

without a factual basis; provided, however, that nothing in this provision shall affect his: 

3 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 4 of 27 PageID #:565 

(a) testimonial obligations, or (b) right to take legal positions in other proceedings to which the 

Commission is not a party. Sarao shall undertake all steps necessary to ensure that his agents 

and employees under his authority or control understand and comply with this agreement; 

11. Agrees to provide immediate notice to this Court and the Commission by certified 

mail, in the manner required by this Consent Order, of any bankniptcy proceeding filed by, on 

behalf of, or against any of them, whether inside or outside the United States; 

12. Agrees that no provision of this Consent Order shall in any way limit or impair 

the ability of any othe1; person or entity to seek any legal or equitable remedy against Sarao in 

any other proceeding; 

13. Admits to all the allegations in the Complaint and to all the Findings of Facts and 

all the Conclusions of Law in this Consent Order. Further, among other things, Sarao 

acknowledges that.the allegations contained in the Complaint and all of the Findings of Fact and 

Conclusions of Law contained in this Consent Order shall be taken as true and correct and be 

given preclusive effect, without further proof, in the course of: (a) any current or subsequent 

bankruptcy proceeding filed by, on behalf of, or against Defendants; (b) any proceeding pursuant 

to Section 8a of the Act, 7 U.S.C. 12a (2012), and/or Part 3. of the Regulations, 17 C.F.R. §§ 3.1, 

et seq. (2014); (c) any proceeding to enforce the te1ms of this Consent Order; and/or (d) any 

other proceeding to which the Commission is a party. 

4 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 5 of 27 PageID #:566 

III. FINDINGS AND CONCLUSIONS 

The Court, being fully advised in the premises, finds that there is good cause for the entry 

of this Consent Order and that there is no just reason for delay. The Court therefore directs the 

entry of the following Findings of Fact, Conclusions of Law, permanent injunction, civil 

monetary penalty and equitable relief pursuant to Section 6c of the Act, 7 U.S.C. § 13a-l (2012), 

as set forth herein. 

THE PARTIES AGREE AND THE COURT HEREBY FINDS: 

A. Findings of Fact 

1. Parties to this Consent Order 

14. PlaintiffU.S. Commodity Futures Trading Commission is an independent federal 

regulatory agency that is charged by Congress with the responsibility for administering and 

enforcing the Act, 7 U.S.C. §§ 1-26 (2012), ·and the Regulations promulgated thereunder, 17 

C.F.R. §§ 1.1-190.10 (2014). One of its core responsibilities is to protect the public interest by 

deterring and preventing price manipulations of the commodities or futures markets or other 

disruptions to market integrity. See 7 U.S.C. § 5(b) (2012). 

15. Defendant N avinder Singh Sarao resides in London, England and is the owner 

and sole employee and trader of Sarao Futures. Sarao was responsible for trades on behalf of 

Sarao Futures at all times relevant to this Consent Order. Sarao has been a member of the CME 

since May 2008. Sarao has never been registered with the Commission. 

2. Defendants' Futures Trading 

16. From at least April 2010 to January 2012; July 2012 to June 2014; and September 

2014 to .April 17, 2015 (Relevant Period), Defendants principal business was trading futures 

contracts-primarily very high volumes in the Chicago Mercantile Exchange's (CME's) E-mini 

S&P 500 futures near month contract (E-mini S&P). From April 2010 to September 2014, all 

5 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 6 of 27 PageID #:567 

Sarao Futures's E-mini S&P trading was done by Sarao, its sole employee. Beginning in 

October 2014, Sarao began trading E-mini S&P contracts in a personal account in a manner 

similar to Sarao Futures's prior trading. On most days, Defendants traded tens of thousands of 

E-mini S&P contracts (worth billions of dollars in notional value), but typically maintained open 

positions for a very short time in an attempt to quickly take advantage of small price movements. 

17. During the Relevant Period, Defendants utilized a combination of automated and 

manual trading systems to place, modify, and cancel orders, resulting in a very high number of 

orders, modifications, cancelations, and transactions, especially compared to other E-mini S&P 

market participants. Defendants actively traded in the E-mini S&P market on more than 800 

days during the Relevant Period. 

18. Generally, during the Relevant Pedod, Defendants employed a high-frequency, 

day-trading strategy in the E-mini S&P market. Accordingly, duting the Relevant Period, 

Defendants frequently would establish large, short-term positions on either side of the market 

throughout the day and quickly trade out of those positions. Defendants typically repeated this 

cycle many times a day, but would normally begin and end each day flat, holding no positions. 

19. For example, on May 4, 2010, Defendants had established a long position of over 

2,000 E-mini S&P contracts, and over a 40-minute period, then proceeded to repeatedly sell and 

buy E-mini S&P contracts such that, at the end the 40-minute period, Defendants had established 

a short position of over 1,500 contracts. This cycle was repeated several times during the day, 

and Defendants ultimately ended the day flat, profiting $876,823 from this trading. On that day, 

Defendants had the fifth-highest trading volume in the E-mini S&P, trading 130,030 E-mini S&P 

contracts. 

6 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 7 of 27 PageID #:568 

3. The E-mini S&P Market 

20. Trading in the E-mini S&P is conducted electronically via the CME's Globex 

electronic trading system. Globex traders have the ability to enter, modify, and cancel bids and 

offers in a matter of milliseconds through a computer portal to the Globex platform. 

21. When a "buy" or "sell" order is placed on Globex, the order becomes part of the 

order book. The order book displays the total order volume ten ticks deep on both the bid and 

ask sides. Individual orders are aggregated at each tick so it is typically not possible for market 

participants to identify individual orders within the order book. Globex functions such that the 

best available bid or ask price must be taken ("hit" or "lifted") by the market for a trade to occur, 

before the next available best bid or ask price can be taken. The best bid price is the highest 

available price for buy orders that are posted in the market. The best ask ptice is the lowest 

available price for sell orders that are posted in the market. 

22. Many market participants, relying on the information contained in the order book, 

consider the total relative number of bid and ask offers in the order book when making trading 

decisions. For instance, if the total number of sell orders significantly outweighs the total 

number of buy orders, market participants may believe a price drop is imminent and trade 

accordingly. Similarly, if the balance of buy and sell orders changes abruptly, market 

participants may believe the new orders represent legitimate changes to supply and demand and 

therefore trade accordingly. Further, many market participants utilize automated trading systems 

that analyze the market for these types of order imbalances and use that inf01mation to determine 

trading strategies. Consequently, actions in the order book can, and do, affect the price of the Emini S&P. 

7 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 8 of 27 PageID #:569 

4. Defendants' Manipulative Scheme 

23. During the Relevant Period, Defendants engaged in a scheme to manipulate the 

price of the E-mini S&P utilizing a variety of manual and automated spoofing tactics in the Emini S&P order book designed to cause price swings that Defendants could exploit through their 

trading. 

24. More specifically, Defendants placed thousands of orders to buy or to sell E-mini 

S&P futures contracts that they did not intend to execute at the time the orders were placed 

(Spoof Orders). Defendants' intent in placing these Spoof Orders was to create a materially false 

and misleading impression of supply (when placing sell-side Spoof Orders) and demand (when 

placing buy-side Spoof Orders) in order to induce other market participants to react to the false 

Spoof Order information and to buy or sell E-mini S&P futures contracts at prices, quantities, 

and/or times that, but for Defendants' Spoof Orders, they would not otherwise have traded. 

25. In thousands of instances, Defendants were able to induce other market 

participants into buying or selling E-mini S&P futw-es contacts by placing the Spoof Orders, 

which had the additional purpose and effect of artificially depressing (in the case of sell-side 

Spoof Orders) or artificially inflating (in the case of buy-side Spoof Orders) the price ofE-mini 

S&P futures contracts when the Spoof Orders were active. After causing artificial prices in the 

E-mini S&P futw-es market, Defendants frequently executed real, genuine orders (Genuine 

Executed Orders) to buy (typically at artificially low prices) or sell (typically at artificially high 

prices) E-mini S&P futures contracts. 

26. Defendants frequently were able to generate significant trading profits from 

buying and selling the Genuine Executed Orders in close temporal proximity to the placement of 

the Spoof Orders by either exiting from pre-existing positions that Defendants established before 

8 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 9 of 27 PageID #:570 

placing the Spoof Orders or quickly placing and executing Genuine Executed Orders while the 

Spoof Orders were active. 

a) Defendants' Automated Manipulative/Spoofing Techniques 

27. Jn late 2008, Defendants began utilizing the services of computer programmers to 

assist in developing automated spoofing functionality. Ultimately, with the assistance of 

programmers, Defendants created and utilized at least two different automated programs to 

generate, modify, and cancel Spoof Orders- the "Dynamic Layering Program" and the "Backof-Queue Program." Defendants activated these automated programs by Sarao clicking his 

mouse on pre-programmed "buttons" and deactivated the programs by Sarao clicking his mouse 

on the "buttons" again. 

28. In working with the computer programmers to create and perfect the automated 

trading programs, Defendants demonstrated an intent to use the programs to place orders (1) with 

no intention of executing those orders; and (2) with an intention to affect E-mini S&P market 

pnces. 

29. For instance, on January 26, 2009, Sarao emailed a programmer, indicating he had 

a prototype of an automated program running and that "[ w ]e now need to make it workable in 

terms of me moving the market like we discussed." A week later, Sarao emailed the same 

programmer indicating that when he was "short," he wanted to "spoof [the market] down." 

30. On February 24, 2009, Sarao emailed the same programmer asking that the 

program be designed so that "it is very easy for me to enter orders of varying different amounts. 

That's what I need. lfl keep entering the same clip sizes, people will become aware of what I 

am doing, rendering my spoofing pointless." Three days later, Sarao emailed the same 

programmer, demanding tweaks to the automated functionality and indicating he wa~ "getting hit 

on my spoofs all the time and it's costing me money." 

9 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 10 of 27 PageID #:571 

31. Subsequently, Sarao continued attempting to perfect the automated trading 

programs. Beginning in June 2009, Sarao sought assistance from another programmer employed 

by the company that designed and sold his off-the-shelf trading platform. In that email, Sarao 

indicated that he wanted the trading program to be altered to have numerous additional functions, 

including, among other things: 

• a "cancel if close function"; 

• the ability to "alternate the closeness ie one price away or three prices 

away"; 

• "a facility to be able to enter multiple orders at different prices using one 

click"; 

• "[t]he ability for my orders to rest on particular size, ie my order will be 

pulled if there are not x amount of orders beneath it"; and 

• "[t]he ability for my orders to only allow 1 clip to go into them. Hence, if 

I am working 500 lot and a 2 lot trades, the 498 balance is removed 

immediately." 

32. In November 2009, Sarao emailed a representative of the trading platform 

company thanking him for assisting in modifying the trading platform and noting that he "found 

[the modified platform] really useful." Sarao further indicated that 

[t]he system you set up was basically one whereby I tum the 

[trading platform] on or off and when it was tumed on it would put 

offers a specific value and quantity away from the best offer. In · 

the version you set up, we always had offers 3, 4, 5 and 6 prices 

away from the best offer. · 

Sarao went on to request that the trading system company representative give Sarao the code 

directly so that Sarao could "play around with creating new versions" of the modified platform. 

10 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 11 of 27 PageID #:572 

(1) Defendants' Use of the Dynamic Layering Program 

33. Defendants routinely used the Dynamic Layering Program to place 4 to 6 

exceptionally large sell orders into the order book, each one tick from the next, generally 

beginning at least three or four ticks from the best asking price. As the market price moved, the 

Dynamic Layering Program automatically and simultaneously modified the large layered sell 

orders at the various p1ice levels, resulting in Defendants' orders generally remaining at least 

three or four ticks from the best asking price in the order book. These large layered orders were 

modified hundreds of times to keep them from resulting in executed trades, before eventually 

being canceled. 

\ . 

34. During the Relevant Period, Defendants activated the Dynamic Layering Program 

3,653 times, resulting in the placement of 19,888 layered orders of various lot sizes. 

35. During the Relevant Period, on average: 

• it took only 500 milliseconds for the Dynamic Layering Program's layered 

sell orders to move in unison and in symmetry with the market price after 

a change (either up or down) in market price. 

• Defendants' layered sell orders contained approximately 2,000 sell orders 

(at multiple price levels), with a combined average face value of 

approximately $128,615,160. 

• the Dynamic Layering Program was active approximately 7 minutes at a 

time, and, when active, the E-mini S&P prices dropped, on average, more 

than 1 tick. 

11 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 12 of 27 PageID #:573 

• Defendants' Genuine Executed Orders were at least 1. 7 times more 

profitable per contract traded when the Dynamic Layering Program was 

active than when no Spoof Orders were active. 

36. During the Relevant Pe1iod, only 90 of the Defendants' 19,888 layered sell orders 

were even partially executed. 

37. During the Relevant Period, Defendants profited at least $9,667,258.22 as a result 

.of the Dynamic Layering Program. 

38. During the Relevant Period, Defendants' purpose and intent in using the Dynamic 

Layering Program was to place layered sell orders (i.e., Spoof Orders) into the E-mini S&P 

market to create a false sense of supply, induce other market participants to react to this false 

sense of supply, and create an artificial p1ice in the E-mini S&P futures contracts-all so that 

Defendants could profit, mitigate potential losses, and/or liquidate positions at more favorable 

prices than were otherwise available without the use of the Dynamic Layering Program. 

(2) Defendants' Use of the Back-of-Queue Program 

39. Defendants used the Back-of-Queue Program to place Spoof Orders at various 

price levels of the visible order"book, including at the best ask or bid. The purpose of the Backof-Queue orders was to place large orders in the visible E-mini S&P order book to affect prices, 

but minimize the chances th,at such orders would result in executed trades. 

40. The Back-of-Queue Program minimized the chance of Defendants' orders being .

executed by taking advantage of the CME's "first in, first out" order matching fμnctionality. 

This functionality placed orders at the same price level in a queue, arranged from first received 

to last received, meaning orders later in the queue were less likely to result in executed trades. 

Further, the CME's order matching functionality dictated that if an order quantity was increased 

12 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 13 of 27 PageID #:574 

(but not if it was decreased), that order would be moved to the back of the queue at that price 

level, as if it were an entirely new order. 

41. Defendants' Back-of-Queue Program took advantage of this CME matching 

functionality by modifying the quantity of Defendants' Spoof Orders up by one contract if other 

market participants entered an order of a certain size at the same price level after Defendants 

Back-of-Queue Program orders were plac·ed. Thus, when active, Defendants' Back-of-Queue 

Program continually moved Defendants' Spoof Orders to the back of the queue at a particular 

p1ice level as new orders entered the market and greatly minimized the chances of that order 

resulting in an executed trade. 

42. Defendants placed at least 2,136 Back-of-Queue Program orders from January 

2012 to October2013. On average: 

• Defendants utilized 2.2 Back-of-Queue Program orders at any one time, 

with an aggregate combined size of795 lots, for an average combined face 

value of $59,348,904. 

• the Back-of-Queue Program was active approximately 3 minutes at a time, 

and, when active, the E-mini S&P price moved by more than half a tick. 

• the percentage of Back-of-Queue Program order lots (which were 

typically orders at the best bid or ask or within two price points from the 

price) that were filled was 3.5 percent. 

• Defendants' Genuine Executed Orders were at least 3 .2 times more 

profitable per contract traded when his Back-of-Queue Program orders 

were active than when no Spoof Orders were active. 

13 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 14 of 27 PageID #:575 

43. During the Relevant Period, Defendants profited at least $1,319,791.54 as a result 

of the Back-of-Queue Program. 

44. During the Relevant Period, Defendants' purpose and intent in using the Back-ofQueue Program was to place the Back-of-Queue orders (i.e., Spoof Orders) into the E-mini S&P 

market to create a false sense of supply and/or demand, induce other market participants to react 

to this false sense of supply, and create an artificial price in the E-mini S&P futures contract-all 

so that Defendants could profit, mitigate poten~al losses, and/or liquidate positions at more 

favorable prices than were otherwise available without the use of the Back-of-Queue Program. 

b) Defendants' Manual Manipulative/Spoofing Techniques 

45. In addition to the automated spoofing programs, Defendants engaged in at least 

two manual spoofing techniques-"Flash 2,000-Lot Spoofing" and "Resting Spoof Orders." 

(1) Defendants' Use of Flash 2,000-Lot Spoofing 

46. Defendants frequently placed a 2,000-lot order at the best bid or offer and traded . 

a Genuine Executed Order on the opposite side while his 2,000-lot order was active or within 1 

second of canceling his 2,000-lot order (Flash 2,000-Lot Orders). 

47. Defendants mitigated the risk of the Flash 2,000-Lot Orders being executed in 

two ways. First, often the placing of the Flash 2,000-Lot Orders caused the prevailing market 

price to move one or more ticks away from the order, meaning the Flash 2,000-Lot Order was no 

longer at the best ask or bid and, thus, not likely to result in execution. Second, if the prevailing 

price did not move away from the Flash 2,000-Lot Order, Defendants nearly always successfully 

canceled the Flash 2,000-Lot Order prior to any execution. When Defendants' Genuine 

Executed Orders were fully filled opposite the Flash 2,000-Lot Orders, Defendants typically 

cancelled the Flash 2,000-Lot Order within 2 seconds of fully filling his Genuine Executed 

Orders. Approximately 98% of the Flash 2,000-Lot Orders were canceled prior to execution. 

14 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 15 of 27 PageID #:576 

48. During the Relevant Period, Defendants placed approximately 800 Flash 2,000-

Lot Orders. On average: 

• Defendants' Genuine Executed Orders that traded opposite Defendants' 

Flash 2,000-Lot Order were significantly smaller-only 185.5 lots; 

• despite being placed at the best bid or ask, only 2.1 % (or approximately

0.4% by lot) of the Flash 2,000-Lot Orders were filled; and 

• Defendants' Genuine Executed Orders that traded opposite Defendants' 

Flash 2,000-Lot Orders were more than 16 times more profitable per 

contract traded than his other Genuine Executed Orders. 

49. · During the Relevant Period, Defendants profited at least $1,884,53_7.50 as a result 

of their Flash 2,000-Lot Orders. 

50. During the Relevant Period, Defendants' purpose and intent in using the Flash 

2,000-Lot Orders was to place the Flash 2,009-Lot Orders (i.e., Spoof Orders) into the E-mini 

S&P market to create a false sense of supply and/or demand, induce other market participants to 

react to this false sense of supply, and create an artificial price in the E-mini S&P futures 

contract- all so that Defendants could profit, mitigate potential losses, and/or liquidate positions 

at more favorable prices than were otherwise available wjthout the use of the Flash 2,000-Lot 

Orders. 

(2) Defendants' Use of Resting Spoof Orders 

51. Another manual technique Defendants regularly used was to place resting Spo'of 

Orders in large quantities, at least one or two levels away from the best bids or offers (Resting 

Spoof Orders). Defendants often placed these Resting Spoof Orders in combination with other 

Spoof Orders and would trade Genuine Executed Orders opposite and in close temporal 

15 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 16 of 27 PageID #:577 

proximity to the Resting Spoof Orders. Defendants typically canceled the Resting Orders in 

close temporal proximity to the execution of the Genuine Executed Orders and before the 

Resting Spoof Orders were executed. 

52. For instance, on May 5, 2010, from 11:22 a.m. CT to 12:30 p.m. CT, Defendants 

used the Dynamic Layering Program to place 5 orders totaling 2,500 contracts with a notional 

value of$146.3 million. The orders were 1 tick apart, starting 2 ticks from the best asking price. 

During this hour-long period, Defendants added 107 188-lot and 289-lot sell-side Resting Spoof 

Orders. These Resting Spoof Orders amounted to 25,267 contracts. All but four of these orders 

were canceled before any execution and the median cancelation time was less than a second. 

53. During the Relevant Period, the purpose and intent motivating Defendants' 

placement of Resting Spoof Orders was to introduce the orders into the E-mini S&P market to 

create a false sense of supply and/or demand, induce other market participants to react, and 

create an artificial price in the E-mini S&P futures contract-all so that Defendants could profit, 

mitigate potential loss, or liquidate positions at more favorable prices than were otherwise 

available without the use of the Resting Orders. 

5. Defendants' Actions on the 2010 Flash Crash Day 

54. Defendants aggressively used the Dynamic Layering Program and Resting Spoof 

Orders on May 6, 2010, the 2010 Flash Crash Day. On that day, Defendants used the Dynamic 

Layering Program for a cumulative time of over 4 hours and 25 minutes, typically placing 6 

orders at one time, averaging 2600 contracts. Cumulatively, these orders were modified over 

81,000 times, with only 81 lots resulting in executed trades. 

55. More specifically, at 11: 17 a.m. CT, Defendants turned the Dynamic Layering 

Program on for more than 2 consecutive hours, until 1 :40 p.m. CT. This was an unusually long 

continuous use of the Dynamic Layering Program during the Relevant Period. During this time 

16 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 17 of 27 PageID #:578 

period, Defendants utilized the Dynamic Layering Program to place 5 orders, totaling 3,000 

contracts. A sixth order was added at around 1: 13 p.m. CT, increasing the total to 3,600 

contracts. 

56. These orders represented approximately $170 million to over $200 million worth 

of persistent downward pressure on the E-mini S&P price and, over the next 2 hours, represented 

20-29% of the entire sell-side of the order book. The orders were replaced or modified more 

than 19,000 times before being canceled at 1 :40 p.m. CT. At that time, the order book was 

severely imbalanced, and Defendants' 3,600 Dynamic Layering Program orders were almost 

equal to the entire buy-side of the Order Book. 

57. Further, Defendants exacerbated the effects of the Dynamic Layering Program 

that day by simultaneously using Resting Spoof Orders. Between 12:33 p.m. CT-1 :45 p.m. CT,

Defendants placed a total of 135 orders with 188 or 289 lots on the sell-side of the Order Book, 

totaling 32,046 contracts. Of these 135 188/289-lot orders, 132 orders were canceled without 

resulting in execution. 

58. May 6, 2010 represented one of Defendants' most consistent, numerous and 

aggressive use of Spoof Orders during the Relevant Period. 

59. On May 6, 2010, Defendants' actions contributed to an extrem~ order book 

imbalance in the E-mini S&P market. In their Preliminary Findings Regarding the Events of 

May 6, 2010, the CFTC and the Securities and Exchange Commission noted that a significant 

imbalance between sell orders and buy orders contributed to a sudden loss of liquidity· in the Emini S&P market. The report further stated that this loss ofliquidity, in conjunction with other 

market events, directly contributed to the E-mini S&P price crash. 

17 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 18 of 27 PageID #:579 

60. At multiple times on May 6, 2010, Defendants successfully used Spoof Orders to 

affect the E-mini S&P price, causing and creating artificial prices. · 

6. . Other Perfected Manipulation Days 

61. Defendants successfully used Spoof Orders to affect the E-mini S&P price, 

causing and creating artificial prices throughout the Relevant Period, including multiple times on 

at least the following days: April 27, May 4, 5, and 10, 2010; January 28, February 22, March 4, 

May 2, July 29, and August 4, 2011; and March 10, 2014. 

B. Conclusions of Law 

1. Jurisdiction and Venue 

62. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 

7 U.S.C. § 13a-l (2012), which provides that whenever it shall appear to the Commission that 

any person has engaged, is engaging, or is about to engage in any act or practice constituting a 

violation of any provision of the Act or any rule, regulation, or order promulgated thereunder, the 

Commission may bring an action in the proper district court of the United States against such 

person to enjoin such act or practice, or to enforce compliance with the Act, or any rule, 

regulation or order thereunder. 

63. Venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. 

§ 13a-l(e) (2012), because Defendants transacted business in this District and certain 

transactions, acts, and practices alleged in the Complaint and described herein, occurred within 

this District. 

18 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 19 of 27 PageID #:580 

2. Sarao Manipulated the E-mini S&P in Violation of Sections 6(c) and 

9(a)(2) of the Act for the Period Prior to August 15, 2011 and Sections 6(c)(3) 

and 9(a)(2) of the Act and Regulation 180.2 for the Period August 15, 2011 to 

April 17, 2015 

64. As referenced in the Findings of Fact, Sarao violated Sections 6(c) and 9(a)(2) of 

the Act from at ]east April 2010 to August 15, 2011, and Sections 6(c)(3) and 9(a)(2) of the Act 

and Regulation 180.2 fromAugust-15, 2011 to April 17, 2015, because, among other things: (I) 

he had the ability to affect or influence E-mini S&P market prices; (2) he specifically intended to 

do so through bis Spoof Orders; (3) artificial prices in the E-mini S&P were created on at least 

the following days durit).g the Relevant Period- April 27, May 4-6, and May 10, 2010; January 

28, February 22, March 4, May 2, July 29, and August 4, 2011; and March 10, 2014; and (4) he 

caused these artificial prices in the E-mini S&P. 

3. Sarao Attempted to Manipulate the E-mini S&P in Violation of 

Sections 6(c) and 9(a)(2) of the Act for the period prior to August 15, 2011 

and Sections 6(c)(3) and 9(a)(2) of the Act and Regulation 180.2 for the 

period August 15, 2011 to April 17, 2015 

65. By the conduct described in the Findings of Fact, Sarao violated Sections 6(c) and 

9(a)(2) of the Act from at least April 2010 to August 15, 2011, and Sections 6(c)(3) and 9(a)(2) 

of the Act and Regulation 180.2 from August 15, 2011 to April 17, 2015, because, among other 

things: (1) he intended to affect or influence E-mini S&P market prices throughout the Relevant 

Period; and (2) he committed over acts (namely, tens of thousands of Spoof Orders) in 

furtherance of that intent. 

4. Sarao Spoofed the E-mini S&P in Violation of Section 4c(a)(5) of the

Act. 

66. By the conduct described in the Findings of Pact, Sarao violated Section 4c(a)(5) 

of the Act from July 16, 2011 to April 17, 2015, because, among other things, he placed tens of 

19 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 20 of 27 PageID #:581 

thousands of bids and offers for the E-mini S&P contract with the intent of cancelling those bids 

and offers before execution (i.e., Spoof Orders) throughout that period. 

5. Sarao Employed a Manipulative Device, Scheme or Artifice to 

Defraud in Connection with Commodity Futures in Violation of Section 

6(c)l) of the Act and Regulation 180.1 

67. By the conduct described in the Findings of Fact, Sarao violated Section 6(c)(l) 

of the Act and Commission Regulation 180.l(a) from August 15, 2011 to April 17, 2015, 

' 

because, among other things: (1) he employed or attempted to employ, a manipulative device, 

scP,eme, or artifice to defraud or engaged in an act, practice, or course of business, which 

operated as a fraud or deceit upon E-mini market participants, through his tens of thousands of 

Spoof Orders (as· described above); (2) either intentionally or recklessly; (3) in connection with 

the E-mini S&P, a futures contract on or subject to the rules of a registered entity. 

6. Sarao Controlled Sarao Futures 

68. Sarao controlled Sarao Futures directly or indirectly, and did not act in good faith 

or knowingly induced, directly or indirectly, the acts of Sarao Futures that constitute the 

violations alleged in the Complaint and set forth herein; therefore, pursuant to Section 13(b) of 

the Act, Sarao is liable as a controlling person for the violations by Sarao Futures of the Act and 

Regulations. 

IV. PERMANENT INJUNCTION 

IT IS HEREBY ORDERED THAT: 

69. Based upon and in connection with the foregoing conduct, pursuant to Section 6c 

of the Act, 7 U.S.C. § 13a-l (2012), Sarao is permanently restrained, enjoined and prohibited 

from directly or indirectly: 

(a) manipulating or attempting to manipulate the price of any futures contract 

or commodity in interstate commerce, or for future delivery on or subject 

20 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 21 of 27 PageID #:582 

to the rules of any registered entity, including any contract market, in 

violation of Sections 6(c)(3) and 9(a)(2) oftbe Act and Regulation 180.2; 

(b) engaging in any trading practice, or conduct on or subject to the rules of a 

registered entity that is, is of the character of, or is commonly known to 

the trade as, "spoofing" (bidding or offering with the intent to cancel the 

bid or offer before execution), in violation of Section 4c(a)(5)(C) of the 

Act, 7 U.S.C. § 6c(a)(5)(C) (2012); and 

(c) employing, or attempting to use or employ any manipulative device, 

scheme, or artifice to defraud in connection with a contract for future 

delivery on a registered entity, in violation of Section 6( c )(1) of the Act, 7 

U.S.C. § 9(1) (2012), and Regulation 180.1, 17 C.F.R. § 180.1 (2015). 

70. Sarao is also permanently restrained, enjoined, and prohibited from directly or 

indirectly: 

(a) trading on or subject to the rules of any registered entity (as that term is 

defined in Section la(40) of the Act, 7 U.S.C. § la(40) (2012)); 

(b) entering into any transactions involving "commodity interests" (as that term 

is defined in Regulation l.3(yy), 17 C.F.R. § l.3(yy) (2014)) for his own 

personal account or for any account in which he has a direct or indirect 

interest; · 

( c) having any commodity interests traded on his behalf; 

( d) controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account 

involving commodity interests; 

( e) soliciting, _receiving or accepting any funds from any person for the 

purpose of purchasing or selling any commodity interests; 

(f) applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except 

as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2014); 

and/or 

(g) acting as a principal (as that term is defined in Regulation 3.l(a), 17 

C.F.R. § 3.l(a) (2014)), agent or any other officer or employee of any 

person (as that term is defined in Section la(38) of the Act, 7 U.S.C. 

§ la(38) (2012)), registered, exempted from registration or required to be 

registered with the Commission except as provided for in Regulation 

4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2014). 

21 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 22 of 27 PageID #:583 

V. DISGORGEMENT AND CIVIL MONETARY PENALTY 

A. DISGORGEMENT 

71. Sarao shall pay disgorgement in the amount of $12,871,587.26 (Disgorgement 

Obligation), plus post-judgment interest. Post-judgment interest shall accrue on the 

Disgorgement Obligation beginning on the date of entry of this Consent Order and shall be 

determined by using the Treasury Bill rate prevailing on the date of entry of this Consent Order 

pursuant to 28 U.S.C. § 1961 (2012). 

72. Sarao' s initial disgorgement payment shall be made within 10 days of issuance of 

this Consent Order and shall consist of a11 money in the escrow account, located at HSBC Bank 

USA, Account name Kobre LP IOLA Account, Number -0009, in the amount of $6,960,102.60 

(the Frozen Funds). 

73. Sarao is currently the defendant in a criminal action charging him for the 

misconduct that is at issue in this matter. See United States of America v. Navinder Singh Sarao, 

Case No. 15-00075, U.S. District Court for the Northern District of Illinois (Criminal Action). 

For amounts disbursed to the United States as a result of satisfaction of any disgorgement 

ordered in the C1iminal Action, Sarao shall receive a dollar-for-dollar credit against the 

Disgorgement Obligation. 

74. Sarao shall pay his Disgorgement Obligation by electronic funds transfer, U.S. 

postal money order, certified check, bank cashier's check, or bank money order. If payment is to 

be made other than by electronic funds transfer, then the payment shall be made payable to the 

Commodity Futures Trading Commission and sent to the address below: 

22 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 23 of 27 PageID #:584 

Commodity Futures Trading Commission

Division of Enforcement 

ATTN: Accounts Receivables 

DOT/FAAIMMAC/AMZ-341 

CFTC/CPSC/SEC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

( 405) 954-7262 office 

( 405) 954-1620 fax 

nikki.gibson@faa.gov 

If payment by electronic funds transfer is chosen, Sarao shall contact Nikki Gibson or her 

successor at the address above to receive payment instructions and shall fully comply with those 

instructions. Sarao shall accompany payment of the Disgorgement Obligation with a cover letter

that identifies Sarao and the name and docket number of this proceeding. Sarao shall 

simultaneously transmit copies of the cover letter and the fotm of payment to the Chief Financial 

Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, 

NW, Washington, D.C. 20581. 

B. CIVIL MONETARY PENALTY 

75. Sarao shall pay a civil monetary penalty in the amount of $25,743,174.52 (CMP 

Obligation), plus post-judgment interest, within ten (10) days of the entry of this Consent order. 

If the CMP Obligation is not paid in full within ten (10) days of the date of the entry of this 

Consent Order, then post-judgment interest shaU accme on the CMP Obligation beginning on the 

date of entry of this Consent Order and shall be determined by using the Treasury Bill rate 

prevailing on the date of entry of this Consent Order pursuant to 28 U.S.C. § 1961 (2012). 

76. Sarao shall pay his CMP Obligation by electronic funds trnnsfer, U.S. postal 

money order, certified check, bank cashier's check, or bank money order. If payment is to be 

made other than by electronic funds transfer, then the payment shall be made payable to the 

Commodity Futures Trading Commission and sent to the address below: 

23 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 24 of 27 PageID #:585 

Commodity Futures Trading Commission 

Division of Enforcement · 

ATTN: Accounts Receivables 

DOT/F AA!MMAC/ AMZ-341 

CFTC/CPSC/SEC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

Telephone: ( 405) 954-7262 

nikki.gibson@faa.gov 

If payment by electronic funds transfer is chosen, Sarao shall contact Nikki Gibson or her 

successor at the address above to receive payment instructions and shall fully comply with those 

instructions. Sarao shall accompany payment of the CMP Obligation with a cover letter that 

identifies Sarao and the name and docket number of this proceeding. Sarao shall simultaneously 

transmit copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581. 

77. Partial Satisfaction: Acceptance by the Commission of any partial payment of 

Sarao's CMP Obligation shall not be deemed a waiver of their obligations to make further 

payments pursuant to this Order, or a waiver of the Commission's right to seek to compel 

payment of any remaining balance. 

VI. MISCELLANEOUS PROVISIONS 

78. On April 17, 2015, the Court entered an asset freeze order prohibiting the transfer, 

removal, dissipation and disposal of Defendants' assets (Asset Freeze Order). After payment of 

the Frozen Funds, the court hereby lifts the Asset Freeze Order. 

79. Sarao shall cooperate fully and expeditiously with the Commission/CFTC, 

including the Commission/CFTC's Division of Enforcement, and any other governmental 

agency in this action, and in any investigation, civil litigation, or administrative matter related to 

24 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 25 of 27 PageID #:586 

the subject matter of this action or any current or future Commission investigation related 

thereto. 

80. Injunctive and Equitable Relief Provisions: The injunctive and equitable relief 

provisions of this Order shall be binding upon Sarao, upon any person under the authority or 

control of any of the Sarao, and upon any person who receives actual notice of this Order, by 

personal service, email, facsimile or otherwise insofar as he or she is acting in active concert or 

participation with Defendants. 

81. Notice:.All notices required to be given by any provision in this Order shall be 

sent ce1tified mail, return receipt requested, as follows: 

Notice to Commission: 

Charles Marville 

Deputy Director 

Division of Enforcement 

Commodity Futures Trading Commission 

4900 Main Street; Suite 500 

Kansas City, Missouri 64112 

All such notices to the Commission shall reference the name and docket number of this action. 

82. Change of Address/Phone: Until such time as. Sarao satisfies in full his 

Disgorgement and CMP Obligations, as set forth in this Order, Sarao shall provide written notice 

to the Commission by certified mail of any change to their telephone number and mailing 

address within ten (10) calendar days of the change. 

83. Entire Agreement and Amendments: The Consent Order incorporates all of the 

terms and conditions of the settlement among the parties hereto to date. Nothing shall serve to 

amend or modify this Consent Order in any respect whatsoever, unless: (a) reduced to writing; 

(b) signed by all parties hereto; and ( c) approved by order of this Court. 

25 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 26 of 27 PageID #:587 

84. Invalidation: If any provision of this Order or if the application of any provision 

or circumstance is held invalid, then the remainder of this Order and the application of the 

provision to any other person or circumstance shall not be affected by the holding. 

85. Waiver: The failure of any party to this Consent Order at any time to require 

performance of any provision of this Consent Order shall in no manner affect the right of the 

party at a later time to enforce the same or any other provision of this Consent Order. No waiver 

in one or more instances of the breach of any provisions contained in this Consent Order shall be 

deemed to be or constrned as a further or continuing waiver of such breach or waiver of the 

breach of any other provision of this Consent Order. -

86. Continuing Jurisdiction of this Court: This Comt shall retain jurisdiction of this 

action to ensure compliance with this Order and for all other purposes related to this action, 

including any motion by the Sarao to modify, or for relief from, the terms of this Order. 

87. Counterparts and Facsimile ExeGution: This Consent Order may be executed in 

two or·more counterparts, all of which shall be considered one and the same agreement and shall 

become effective when one or more counterparts have been signed by each of the parties hereto 

and delivered (by facsimile, e-mail, or otherwise) to the other party, it being understood that all 

parties need not sign the same counterpart. Any counterpart or other signature to this Consent 

Order that is delivered by any means shall be deemed for all purposes as constituting good and 

valid execution and delivery by such party of this Consent Order. 

88. Contempt: Sarao understands that the terms of the Consent Order are enforceable 

through contempt proceedings, and that, in any such proceedings they may not challenge the 

validity of this Consent Order. 

26 
Case: 1:15-cv-03398 Document #: 74-1 Filed: 11/09/16 Page 27 of 27 PageID #:588 

89. Agreements and Undertakings: Sarao shall comply with all of the undertakings 

and agreements set forth in this Consent Order. 

SO ORDERED, at Chicago, Illinois on this_ day of 2016 

Andrea R. Wood 

UNITED STATES DISTRJCT TIJDGE 

CONSENTED TO: 

N~hSarao 

APPROVED AS TO FORM: 

By: Isl Roger Burlingame 

Roger Burlingame 

Kobre & Kim LLP 

800 Third A venue, 6th Floor 

New York, NY 10022 

(212) 488-1200 

Roger.Burlingame@kobrekim.com 

Dated: \ili 2016 

27 

U.S. Commodity Futures Trading 

Commission, 

By: Isl Jeff Le Riche 

Jeff Le Riche 

Chief Trial Attorney 

Division of Enforcement 

Commodity Futures Trading 

Commission 

4900 Main Street; Suite 500 

Kansas City, Missouri 64112 

(816) 960-1-141")7"5' 

rr~:~~~~i~.0i)v 

Dated:JLLE 2016