Incident 28: 2010 Market Flash Crash

Description: A modified algorithm was able to cause dramatic price volatility and disrupted trading in the US stock exchange.


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Alleged: Navinder Sarao , Waddell & Reed and Barclays Capital developed and deployed an AI system, which harmed Market Participants.

Incident Stats

Incident ID
Report Count
Incident Date
Sean McGregor

CSETv0 Taxonomy Classifications

Taxonomy Details

Full Description

On May 6, 2010, the New York Stock Exchange and US Down Jones were greatly impacted by highly volatile trading at high volumes. The blame fell on a single trader in the UK, Navinder Singh Saroa, who allegedly modified a trading algorithm to allow him to mislead the market. Saroa would place requests to purchase stocks (establishing interest in the stock and driving the price higher) but cancel the transaction before it was carried out. Reports say that within minutes major stocks such as General Electric and Accentre had hit $0, and the overall market dropped by 6%. Around $1 trillion in paper stocks had seemingly been wiped out. He faces 22 charges in the US.

Short Description

A modified algorithm was able to cause dramatic price volatility and disrupted trading in the US stock exchange.



Harm Type

Financial harm

AI System Description

A stock trading algorithm designed to quickly detect shifts in stock prices and execute trades accordingly.

Sector of Deployment

Financial and insurance activities

Relevant AI functions

Perception, Cognition, Action

AI Techniques

stock market algorithm, machine learning

AI Applications

stock trading



Named Entities

Navinder Singh Saroa, Dow Jones Industrial Index, Chicago Merchant Exchange

Technology Purveyor

Navinder Singh Sarao

Beginning Date


Ending Date


Near Miss

Harm caused


Deliberate or expected

Lives Lost


Infrastructure Sectors

Financial services

Financial Cost

Short term: $1 trillion unclear of long-term impact

Laws Implicated


Data Inputs

Stock Price, trading volume

GMF Taxonomy Classifications

Taxonomy Details

Known AI Goal

Automatic Stock Trading

Potential AI Technology


Potential AI Technical Failure

Overfitting, Gaming Vulnerability

2010 Flash Crash

2010 Flash Crash

2010 Flash Crash

2010 Flash Crash

The 2010 Flash Crash

The 2010 Flash Crash

2010 Flash Crash · 2010

The DJIA on May 6, 2010 (11:00 AM - 4:00 PM EDT)

The May 6, 2010, Flash Crash,[1][2] also known as the Crash of 2:45, the 2010 Flash Crash or simply the Flash Crash, was a United States trillion-dollar[3] stock market crash, which started a…

The 2010 Flash Crash: What Caused It and How to Prevent the Next One · 2010

Fragmentation among stock exchanges . In 1987, when we had the crash that took 22.6% off the Dow, trading execution was much slower and more concentrated. Back then, 90% of stock trading occurred on the New York Stock Exchange (NYSE). In 20… · 2010

On May 6, 2010, the prices of many U.S.-based equity products experienced an extraordinarily rapid decline and recovery. That afternoon, major equity indices in both the futures and securities markets, each already down over 4% from their p…

What Really Caused the Flash Crash · 2011

Here's the basic outline of what caused the biggest one-day point decline in the history of the Dow Jones Industrial Average. On May 6, 2010, the primary market makers in the stock market just stopped automatically taking the other side of …

The 2010 'flash crash': how it unfolded · 2012

In just 20 minutes the New York Stock Exchange had witnessed it’s biggest stock plunge in decades, all traced to one gargantuan sell order

It was 6 May 2010. In the UK it was general election day, in the US,Wall Street was gripped by mounti…

The lasting impact of the 2010 flash crash · 2014

The Dow Jones Industrial Average slumped nearly 1,000 points in a matter of minutes in the flash crash of 2010, sending traders into a panic and inciting scrutiny of the U.S. equities markets that's still being felt four years later.

The Ma… · 2015

Hey look, they caught the guy who caused the flash crash of 2010! His name is Navinder Singh Sarao, and he lives in London and in 2009 he asked someone to help him build a spoofing robot:

On or about June 12, 2009, SARAO sent an email to a …

What happened during the Flash Crash? · 2015

On Thursday May 6, 2010, the US stock market collapsed , wiping billions off some of the world's biggest companies.

The Dow Jones Industrial Average, already down more than 4pc from the previous day's close, plummeted a further 5pc to 6pc i…

The 2010 ‘flash crash’ now has a criminal suspect · 2015

Fox Business Was one trader responsible for the flash crash?

WASHINGTON (MarketWatch) — The 2010 “flash crash” — in which the Dow industrials sank by around 1,000 points before quickly recovering — has been debated for years. But on Tuesday… · 2015

Jessica Morris

The "flash crash" caused the Dow to fall as much as nine per cent (Source: Getty)

British trader Navinder Singh Sarao has been arrested, charged and is facing extradition to the United States over his role in the "flash crash…

Trader Arrested in Manipulation That Contributed to 2010 ‘Flash Crash’ · 2015

Five years ago, the global financial system was rocked by the “flash crash,” 15 minutes of chaos that shook the world’s biggest markets and prompted investors both big and small to question how such a vital part of the economy could be brou…

How an Indian-origin trader caused the 2010 ‘flash crash’ · 2015

An Indian-origin futures trader has been arrested in the U.K. and faces extradition to the U.S. for his alleged role in the May 2010 “flash crash” which wiped billions of dollars off the value of U.S. shares in minutes.

Navinder Singh Sarao…

UK speed trader arrested over role in 2010 'flash crash' · 2015

WASHINGTON (Reuters) - A high-frequency trader was arrested in London over his alleged role in the May 2010 “flash crash” that briefly wiped out nearly $1 trillion in market value, the first time authorities have blamed manipulation for the…

British Trader Navinder Sarao Arrested Over 2010 Flash Crash · 2015

The mystery over the May 6, 2010 Flash Crash took a turn on Tuesday when the Department of Justice said it arrested Navinder Singh Sarao, a little known trader working from his home near London's Heathrow Airport, for allegedly playing a ke…

The 'flash crash' trader: Here's how much he allegedly made. · 2015

Nearly five years after the so-called “flash crash”—when the market dropped hundreds of points in the span of a few minutes on May 6, 2010—authorities have arrested a trader that they believe helped cause the swoon.

But the alleged culprit,…

Why the Cause of the 2010 Stock Market Flash Crash Really Matters · 2015

At about 2:30pm on May 6, 2010, an asset management firm began executing a series of orders on the Chicago Mercantile Exchange. Located in Overland Park, Kansas, Waddell & Reed was (and is) one of the oldest mutual fund companies in America…

'Flash Crash' arrest shakes investors' confidence · 2015

CLOSE The cause of the 2010 Flash Crash keeps changing, and the latest who-done-it conclusion has met with skepticism on Wall Street. Jason Allen

Investors question how a small-fry trader moves markets, and why regulators let it go on so lo…

UK-Indian Navinder Singh Sarao arrested over role in 2010 'Flash Crash' · 2015

From a modest stucco house in suburban west London, where jetliners roar overhead on their approach to Heathrow Airport, a small-time trader was about to play a hand in one of the most harrowing moments in Wall Street history.Navinder Singh…

Wall Street 'Flash crash' explained: How 'the Hound of Hounslow' could have caused one of the scariest days in stock market history · 2015

What was the Flash Crash?

One of the most scary and bizarre days in Wall Street’s history. On 6 May 2010, the Dow Jones Industrial Average Index plummeted by 6 per cent in a matter of minutes - an unprecedented single-day fall. The shares o…

2010 Flash Crash Arrest Motivated By Greed · 2015

Whistleblower Program

The past week we have made markets safer by arresting the dangerous flash crash villain who was a threat to national security and the health of the entire financial market system. Like I always say when in doubt follow…

'Flash Crash' a Perfect Storm for Markets · 2015

The flash crash has proven one of the most mysterious market events in recent history. Many observers still believe the event hasn't been fully investigated. Their view is fueled in part by new allegations that a London trader's manipulativ…

"The flash crash" five years later · 2015
  • pencer Platt/Getty Images

Listen To The Story Marketplace Embed Code

May 6, 2015, marks the five-year anniversary of the so-called ‘flash crash’ on the New York Stock Exchange. That day, the Dow Jones Industrial Average plummeted more tha…

What actually caused 2010 "Flash Crash" · 2016

Reuters The search for causation over the May, 2010 "flash crash," a one hour near 1,000 point loss and recovery on the Dow Jones Industrial Average, is a complex topic but one important to accurately document.

Such quantitative market mish…

Navinder Sarao: The man accused of causing the US market to crash · 2016

Image copyright Getty Images Image caption Navinder Sarao, the so-called "flash crash" day trader has been fighting attempts to extradite him to the US

Navinder Sarao, who traded from his parents' home in Hounslow, west London, has been acc…

Top 3 Financial Crashes Caused by High-frequency Trading Algorithms · 2017

In the financial world, high-frequency trading has become the new norm. By using trading algorithms and dedicated tools, stock market players can execute trades in milliseconds. The ultimate goal is to increase profits in a near-automated w…

2010 Flash Crash · 2018

What is the 2010 Flash Crash?

The 2010 Flash Crash is the market crash occurred on May 6, 2010. During the 2010 crash, leading US stock indices, including the Dow Jones Industrial AverageDow Jones Industrial Average (DJIA)The Dow Jones Indu…

The 2010 Flash Crash · 2018

On May 6, 2010, at approximately 2:32 pm EST, all three U.S. stock indices–The Dow Jones Industrial Index, S&P 500, and the Nasdaq Composite–underwent a massive plunge and a partial rebound over a 36-minute period.

In just a matter of minut…

Herding and flash events: Evidence from the 2010 Flash Crash · 2018

Using intraday data on individual stocks included in the S&P 500 index, we present evidence of herd formation over the duration and aftermath of the Flash Crash on May 6, 2010, while no evidence of herding is observed preceding the event. T… · 2018

Using intraday data on individual stocks included in the S&P 500 index, we present evidence of herd formation over the duration and aftermath of the Flash Crash on May 6, 2010, while no evidence of herding is observed preceding the event. T…

if reforms aren't ramped up, the next one could spell global disaster · 2019

In California, people fear the “big one” – an earthquake of such magnitude that it could wipe the state off the map. They look nervously at the intense seismic tremors from previous earthquakes and fear it is only a matter of time. The fina…


A "variant" is an incident that shares the same causative factors, produces similar harms, and involves the same intelligent systems as a known AI incident. Rather than index variants as entirely separate incidents, we list variations of incidents under the first similar incident submitted to the database. Unlike other submission types to the incident database, variants are not required to have reporting in evidence external to the Incident Database. Learn more from the research paper.

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