LONDON – An American academic has defended a British trader accused of contributing to a 2010 flash crash in financial markets, arguing that stocks plummeted because of a confluence of events, including the actions an inexperienced mutual fund employee.
Lawrence Harris, a University of Southern California professor, testified during Navinder Singh Sarao's extradition hearing Thursday.
The United States claims the 37-year-old Sarao used an automated trading program to manipulate the market and make nearly $880,000 on the day the Dow Jones industrial average plunged 1,000 points.
But Harris says the main cause was an "inexperienced" mutual fund trader who submitted the largest order seen that year.
He says there was a reduction in market liquidity at the time due to several large market moves, probably in response to Greek debt.