The British futures trader once blamed for the 2010 U.S. stock market drop known as the “Flash Crash” came to Chicago earlier this month, where federal prosecutors hoped he’d help them convict a software executive from Naperville.
The case against Jitesh Thakkar, accused of helping Navinder Sarao wreak financial havoc, instead ended with a mistrial two weeks ago. Prosecutors moved to dismiss the indictment against Thakkar on Tuesday, and U.S. District Judge Robert Gettleman quickly granted the request.
It’s a rare government loss at the Dirksen Federal Courthouse in Chicago, though the case was handled by a team of prosecutors based in Washington, D.C.
This month’s appearance in Chicago by Sarao, the so-called “Flash Crash” trader, followed his surprise guilty plea in November 2016. He admitted to wire fraud and spoofing and faces a maximum of 30 years in prison. But he hopes to catch a break by testifying for the government.
A judge agreed to let Sarao return home overseas after his guilty plea to make good on his promise to help the feds.
Thakkar, founder of Edge Financial Technologies Inc., had been accused of creating software to help Sarao commit the crime of spoofing — placing bogus orders to improperly manipulate financial markets.
Crucially, prosecutors said Thakkar developed software featuring a “Back of the Book” function, which lowered the risk that Sarao’s bogus orders would actually go through before Sarao could cancel them. The feds say Thakkar was paid $24,000 for the software and retained the rights to the program.
Meanwhile, Sarao told a jury he made roughly $40 million as a trader between 2009 and 2015, and spent “most days” during that time manipulating the markets from London.
Renato Mariotti, Thakkar’s attorney, said in a statement he was grateful “that the government has finally recognized that Jitesh Thakkar is innocent. They should have recognized that before they filed this case.”
“This prosecution revealed a substantial lack of judgment by everyone at the Department of Justice who was involved in the case,” Mariotti said. “They refused to meet with me prior to indictment, but when I was finally given that opportunity, I told the government that Jitesh Thakkar was actually innocent. The evidence at trial established exactly that.”