Update: this story is now on our Great Rip Off map of examples of the abuse of anonymous company ownership around the world.
On Tuesday a former futures trader was arrested in a suburban semi-detached house in London. Navinder Singh Sarao has been accused by the U.S. authorities of being in part responsible for the 2010 “flash crash” where the U.S. Dow Jones index plunged 600 points in less than five minutes.
Tuesday’s arrest, and the accompanying criminal charges, lay bare the vulnerability of the world’s financial markets. It also shows the role of opaque shell companies.
The criminal complaint filed by the U.S. Department of Justice (DOJ) alleges that Saroa used anonymously owned companies in tax havens of Nevis and Anguilla to protect his assets (p.23-4). According to the DoJ, Sarao incorporated Nav Sarao Milking Markets Limited in the Caribbean tax haven of Nevis, and International Guarantee Corporation in the UK haven of Anguilla. The U.S. authorities claim that this was “part of a tax avoidance strategy”.
Neither Anguilla, nor Nevis, publish any information on who owns and controls companies. This can make it extremely difficult to track down who really lies behind such structures.
Global Witness is campaigning for an end to anonymous company ownership. This case appears to provide yet more evidence for why transparency is so important.
Sarao is currently fighting extradition to the U.S.