9/11 put options

by **chiggerbit** » Sat Jul 23, 2005 2:23 am

<a href="http://www.wsws.org/articles/2001/oct2001/bond-o05.shtml">www.wsws.org/articles/200...-o05.shtml</a> Suspicious trading points to advance knowledge by big investors of September 11 attacks By Barry Grey 5 October 2001 Use this version to print | Send this link by email | Email the author In the two weeks preceding the September 11 terror attacks on New York and Washington, there was a sudden and unaccountable rush of speculative trades on the US stock and bond markets that indicate some wealthy and well-connected investors had advance knowledge of the impending catastrophe. Those involved bet large sums on the prospect of a major crisis that would drive down the value of stocks in the airline, tourism and insurance industries, and undermine confidence in the US economy as a whole. Investigations are currently under way by the Securities and Exchange Commission (SEC), the federal watchdog agency for the stock and bond markets, the Secret Service and the FBI. These probes have been given little prominence by the media, in stark contrast to the round-the-clock warnings of new terrorist plots and reports of suspects detained in the US and Europe. The SEC has issued terse acknowledgements that it is looking into suspicious financial transactions to see if they are connected to terrorist organizations. But the scale of the stock and bond activity under scrutiny belies the notion that it could be the work of Osama bin Laden’s guerrilla band, let alone the fanatics who carried out the September 11 atrocities. Over the past several days the Wall Street Journal has carried reports of the SEC and Secret Service probes, and dispatches have been published by the Associated Press and USA Today. But the New York Times and the Washington Post have remained strangely silent, and the network news outlets have said nothing. The Wall Street Journal reported on October 2 that the ongoing investigation by the SEC into suspicious stock trades had been joined by a Secret Service probe into an unusually high volume of five-year US Treasury note purchases prior to the attacks. The Treasury note transactions included a single $5 billion trade. As the Journal explained: “Five-year Treasury notes are among the best investments in the event of a world crisis, especially one that hits the US. The notes are prized for their safety and their backing by the US government, and usually rally when investors flee riskier investments, such as stocks.” The value of these notes, the Journal pointed out, has risen sharply since the events of September 11. The article went on to quote Michael Shamosh, a bond-market strategist for Tucker Anthony Inc., who said, “If they were going to do something like this they would do it in the five-year part of the market. It’s extremely liquid, and the tracks would be hard to spot.” The SEC is investigating a surge in short-selling activity in a variety of stocks in the days preceding the attacks. It has asked US securities firms to produce customer accounts and stock-trading records involving short selling prior to September 11. Short sellers borrow shares and then sell them at the current price. They wager that at the future date by which they must pay for the borrowed shares, the price will have fallen, enabling them to pocket the difference. In the week prior to September 11, shares in airlines, insurance firms, tourism-related businesses and financial companies with offices in the World Trade Center suffered disproportionate drops in their prices, arousing the suspicion of the SEC following the hijack-bombings. After the attacks, these stocks were hit particularly hard by the sell-off on Wall Street. The SEC has been extremely tight-lipped about its probe, in which it has enlisted securities firms and government agencies in Europe, Canada and other countries. But on Tuesday the Investment Dealers Association, a trade association for the Canadian securities industry, posted on its web site a list sent by the American SEC of 38 stocks. The US agency had asked the Canadians to look into trading in these stocks between August 27 and September 11. As soon as US officials became aware of the Internet posting, they demanded that the Investment Dealers Association yank it from the web site, and the Canadian organization complied. However, reporters and others were able to copy the list before it was pulled. The list includes the parent companies of American, Continental, Delta, Northwest, Southwest, United and US Airways, as well as Carnival and Royal Caribbean cruise lines, aircraft maker Boeing and defense contractor Lockheed Martin. Several insurance companies are on the list—American International Group, Axa, Chubb, Cigna, CNA Financial, John Hancock and MetLife. The SEC list also includes several big companies that were tenants in the collapsed Twin Towers of the World Trade Center: investment firms Morgan Stanley, the complex’s largest occupant; Lehman Brothers; Bank of America; and the financial firm Marsh & McLennan. Other major companies listed include General Motors, Raytheon, LTV, WR Grace, Lone Star Technologies, American Express, Bank of New York, Bank One, Citigroup and Bear Stearns. Testifying on Wednesday before the House Committee on Financial Services, Dennis Lormel, chief of the FBI Financial Crimes Section, said, “To date, there are no flags or indicators ... that people took advantage of this.” However USA Today quoted co-founder of PTI Securities Jon Najarian, described as an “active player” on the Chicago Board Options Exchange, who said, “The volumes were exceptional versus the norm.” It is impossible at this point to say which individuals, groups or corporate entities had advance knowledge of the September 11 attacks and used this knowledge to cash in, or whether any of them were based inside the US. But the otherwise inexplicable rush of Treasury note buys and short-selling in specific stocks is a further indication that those involved in the planning of the attacks included highly sophisticated and well-endowed people with a deep understanding of many facets of American society.

by **chiggerbit** » Sat Jul 23, 2005 2:37 am

<a href="http://www.onlinejournal.com/Special_Reports/081703Wokusch/081703wokusch.html">www.onlinejournal.com/Spe...kusch.html</a> Trading on terror: Linking financial markets and war By Heather Wokusch Online Journal Contributing Writer August 17, 2003—The Pentagon's online "terror" futures market may have gone down in flames, but questions surrounding 9/11 insider trading and market rigging before the Iraq invasion still linger. In a much-aligned plan the Pentagon described as "engaging and . . . profitable," anonymous traders were invited to bet on the likelihood of Middle Eastern death and destruction; public outcry forced the "Policy Analysis Market" (PAM) plan to be yanked days before its scheduled launch. But allegations about the ultimate "terror" futures market, 9/11 insider trading, have yet to be adequately addressed. It's known that just weeks before the attacks, speculative trading surged on companies to be hardest hit, such as those located in the World Trade Center. There was a rally in five-year US Treasury notes, the best investment in times of US crisis, and sales of airline-based put options (bets a stock's price will fall) increased sharply too; interestingly, many such put options were sold through a firm previously managed by a top CIA director, A.B. "Buzzy" Krongard. Estimates of 9/11 profit-taking are in the billions of dollars, and according to Dylan Ratigan of Bloomberg Business News, "This could very well be insider trading at the worst, most horrific, most evil use you've ever seen in your entire life. This would be one of the most extraordinary coincidences in the history of mankind if it was a coincidence." Bowing to public pressure, the FBI and other federal watchdogs promised swift and thorough investigations into potential 9/11 insider trading. Significant that today, almost two years after the attacks, no progress seems to have been made. No, it can't be, can it?

by **chiggerbit** » Sat Jul 23, 2005 2:57 am

<a href="http://globalresearch.ca/articles/RUP110A.html">globalresearch.ca/articles/RUP110A.html</a> Suppressed Details of Criminal Insider Trading lead directly into the CIA`s Highest Ranks CIA Executive Director "Buzzy" Krongard managed Firm that handled "put" Options on UAL by Michael C. Ruppert FTW Publications, 9 October 2001 Centre for Research on Globalisation, globalresearch.ca, 20 October 2001 Although uniformly ignored by the mainstream U.S. media, there is abundant and clear evidence that a number of transactions in financial markets indicated specific (criminal) foreknowledge of the September 11 attacks on the World Trade Center and the Pentagon. That evidence also demonstrates that, in the case of at least one of these trades -- which has left a $2.5 million prize unclaimed -- the firm used to place the "put options" on United Airlines stock was, until 1998, managed by the man who is now in the number three Executive Director position at the Central Intelligence Agency. Until 1997 A.B. "Buzzy" Krongard had been Chairman of the investment bank A.B. Brown. A.B. Brown was acquired by Banker's Trust in 1997. Krongard then became, as part of the merger, Vice Chairman of Banker's Trust-AB Brown, one of 20 major U.S. banks named by Senator Carl Levin this year as being connected to money laundering. Krongard's last position at Banker's Trust (BT) was to oversee "private client relations." In this capacity he had direct hands-on relations with some of the wealthiest people in the world in a kind of specialized banking operation that has been identified by the U.S. Senate and other investigators as being closely connected to the laundering of drug money. Krongard (re?) joined the CIA in 1998 as counsel to CIA Director George Tenet. He was promoted to CIA Executive Director by President Bush in March of this year. BT was acquired by Deutsche Bank in 1999. The combined firm is the single largest bank in Europe. And, as we shall see, Deutsche Bank played several key roles in events connected to the September 11 attacks. The Scope of Known Insider Trading Before looking further into these relationships it is necessary to look at the insider trading information that is being ignored by Reuters, The New York Times and other mass media. It is well documented that the CIA has long monitored such trades - in real time - as potential warnings of terrorist attacks and other economic moves contrary to U.S. interests. Previous stories in FTW have specifically highlighted the use of Promis software to monitor such trades. It is necessary to understand only two key financial terms to understand the significance of these trades. "Selling Short" is the borrowing of stock, selling it at current market prices, but not being required to actually produce the stock for some time. If the stock falls precipitously after the short contract is entered, the seller can then fulfill the contract by buying the stock after the price has fallen and complete the contract at the pre-crash price. These contracts often have a window of as long as four months. "Put Options," purchased at nominal prices of, for example, $1.00 per share, are sold in blocks of 100 shares. If exercised, they give the holder the option of selling selected stocks at a future date at a price set when the contract is issued. Thus, for an investment of $10,000 it might be possible to tie up 10,000 shares of United or American Airlines at $100 per share, and the seller of the option is then obligated to buy them if the option is executed. If the stock has fallen to $50 when the contract matures, the holder of the option can purchase the shares for $50 and immediately sell them for $100 - regardless of where the market then stands. A "call option" is the reverse of a put option, which is, in effect, a derivatives bet that the stock price will go up. A September 21 story by the Israeli Herzliyya International Policy Institute for Counterterrorism, entitled "Black Tuesday: The World's Largest Insider Trading Scam?" documented the following trades connected to the September 11 attacks: Between September 6 and 7, the Chicago Board Options Exchange saw purchases of 4,744 put options on United Airlines, but only 396 call options... Assuming that 4,000 of the options were bought by people with advance knowledge of the imminent attacks, these "insiders" would have profited by almost $5 million. On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance;... Again, assuming that 4,000 of these options trades represent "insiders," they would represent a gain of about $4 million. [The levels of put options purchased above were more than six times higher than normal.] No similar trading in other airlines occurred on the Chicago exchange in the days immediately preceding Black Tuesday. Morgan Stanley Dean Witter & Co., which occupied 22 floors of the World Trade Center, saw 2,157 of its October $45 put options bought in the three trading days before Black Tuesday; this compares to an average of 27 contracts per day before September 6. Morgan Stanley's share price fell from $48.90 to $42.50 in the aftermath of the attacks. Assuming that 2,000 of these options contracts were bought based upon knowledge of the approaching attacks, their purchasers could have profited by at least $1.2 million. Merrill Lynch & Co., which occupied 22 floors of the World Trade Center, saw 12,215 October $45 put options bought in the four trading days before the attacks; the previous average volume in those shares had been 252 contracts per day [a 1200% increase!]. When trading resumed, Merrill's shares fell from $46.88 to $41.50; assuming that 11,000 option contracts were bought by "insiders," their profit would have been about $5.5 million. European regulators are examining trades in Germany's Munich Re, Switzerland's Swiss Re, and AXA of France, all major reinsurers with exposure to the Black Tuesday disaster. [FTW Note: AXA also owns more than 25% of American Airlines stock making the attacks a "double whammy" for them.] On September 29, 2001 - in a vital story that has gone unnoticed by the major media - the San Francisco Chronicle reported, "Investors have yet to collect more than $2.5 million in profits they made trading options in the stock of United Airlines before the Sept. 11, terrorist attacks, according to a source familiar with the trades and market data. "The uncollected money raises suspicions that the investors - whose identities and nationalities have not been made public - had advance knowledge of the strikes." They don't dare show up now. The suspension of trading for four days after the attacks made it impossible to cash-out quickly and claim the prize before investigators started looking. "... October series options for UAL Corp. were purchased in highly unusual volumes three trading days before the terrorist attacks for a total outlay of $2,070; investors bought the option contracts, each representing 100 shares, for 90 cents each. [This represents 230,000 shares]. Those options are now selling at more than $12 each. There are still 2,313 so-called "put" options outstanding [valued at $2.77 million and representing 231,300 shares] according to the Options Clearinghouse Corp." "...The source familiar with the United trades identified Deutsche Bank Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of these options..." As reported in other news stories, Deutsche Bank was also the hub of insider trading activity connected to Munich Re. just before the attacks. CIA, the Banks and the Brokers Understanding the interrelationships between CIA and the banking and brokerage world is critical to grasping the already frightening implications of the above revelations. Let's look at the history of CIA, Wall Street and the big banks by looking at some of the key players in CIA's history. Clark Clifford - The National Security Act of 1947 was written by Clark Clifford, a Democratic Party powerhouse, former Secretary of Defense, and one-time advisor to President Harry Truman. In the 1980s, as Chairman of First American Bancshares, Clifford was instrumental in getting the corrupt CIA drug bank BCCI a license to operate on American shores. His profession: Wall Street lawyer and banker. John Foster and Allen Dulles - These two brothers "designed" the CIA for Clifford. Both were active in intelligence operations during WW II. Allen Dulles was the U.S. Ambassador to Switzerland where he met frequently with Nazi leaders and looked after U.S. investments in Germany. John Foster went on to become Secretary of State under Dwight Eisenhower and Allen went on to serve as CIA Director under Eisenhower and was later fired by JFK. Their professions: partners in the most powerful - to this day - Wall Street law firm of Sullivan, Cromwell. Bill Casey - Ronald Reagan's CIA Director and OSS veteran who served as chief wrangler during the Iran-Contra years was, under President Richard Nixon, Chairman of the Securities and Exchange Commission. His profession: Wall Street lawyer and stockbroker. David Doherty - The current Vice President of the New York Stock Exchange for enforcement is the retired General Counsel of the Central Intelligence Agency. George Herbert Walker Bush - President from 1989 to January 1993, also served as CIA Director for 13 months from 1976-7. He is now a paid consultant to the Carlyle Group, the 11th largest defense contractor in the nation, and which shares joint investments with the bin Laden family. A.B. "Buzzy" Krongard - The current Executive Director of the Central Intelligence Agency is the former Chairman of the investment bank A.B. Brown and former Vice Chairman of Banker's Trust. John Deutch - This retired CIA Director from the Clinton Administration currently sits on the board at Citigroup, the nation's second largest bank, which has been repeatedly and overtly involved in the documented laundering drug money. This includes Citigroup's 2001 purchase of a Mexican bank known to launder drug money, Banamex. Nora Slatkin - This retired CIA Executive Director also sits on Citibank's board. Maurice "Hank" Greenburg - The CEO of AIG insurance, manager of the third largest capital investment pool in the world, was floated as a possible CIA Director in 1995. FTW exposed Greenberg's and AIG's long connection to CIA drug trafficking and covert operations in a two-part series that was interrupted just prior to the attacks of September 11. AIG's stock has bounced back remarkably well since the attacks. To read that story, please go to <a href="http://www.copvcia.com/stories/part_2.html.">www.copvcia.com/stories/part_2.html.</a> One wonders how much damning evidence is necessary to respond to what is now irrefutable proof that CIA knew about the attacks and did not stop them. Whatever our government is doing, whatever the CIA is doing, it is clearly NOT in the interests of the American people, especially those who died on September 11.

by **chiggerbit** » Sat Jul 23, 2005 3:00 am

<a href="http://www.cooperativeresearch.org/timeline/popups/010906.html">www.cooperativeresearch.o...10906.html</a> Early September 2001 (J): There is a sharp increase in short selling of the stocks of American and United airlines on the New York Stock Exchange prior to 9/11. A short sell is a bet that a particular stock will drop. There is an increase of 40 percent of short selling over the previous month for these two airlines, compared to an 11 percent increase for other big airlines and one percent for the exchange overall. A significant profit was to be made: United stock dropped 43 percent and American dropped 39 percent the first day the market reopened after the attack. Short selling of Munich Re, the world's largest reinsurer, is also later noted by German investigators. Inquiries into short selling millions of Munich Re shares were made in France days before the attacks. [Reuters, 9/20/01, San Francisco Chronicle, 9/22/01] Munich Re stock plummeted after the attacks, as they claimed the attacks would cost them $2 billion. [Dow Jones Business News, 9/20/01] There is also a shorts spike on Dutch airline KLM stock three to seven days before 9/11, reaching historically unprecedented levels. [USA Today, 9/26/01] Was another attack on a KLM airplane planned? September 6-10, 2001: Suspicious trading occurs on American and United, the two airlines used in the 9/11 attacks. "Between 6 and 7 September, The Chicago Board Options Exchange saw purchases of 4,744 put option contracts [a speculation that the stock will go down] in UAL versus 396 call options – where a speculator bets on a price rising. Holders of the put options would have netted a profit of $5 million once the carrier's share price dived after September 11. On 10 September, more trading in Chicago saw the purchase of 4,516 put options in American Airlines, the other airline involved in the hijackings. This compares with a mere 748 call options in American purchased that day. Investigators cannot help but notice that no other airlines saw such trading in their put options." One analyst says: "I saw put-call numbers higher than I've ever seen in 10 years of following the markets, particularly the options markets." [Associated Press, 9/18/01, San Francisco Chronicle, 9/19/01] "To the embarrassment of investigators, it has also emerged that the firm used to buy many of the "put" options ... on United Airlines stock was headed until 1998 by "Buzzy" Krongard, now executive director of the CIA." Krongard was chairman of Alex Brown Inc., which was bought by Deutsche Bank. "His last post before resigning to take his senior role in the CIA was to head Bankers Trust – Alex Brown's private client business, dealing with the accounts and investments of wealthy customers around the world." [Independent, 10/14/01] FTW Doesn't this hint that the CIA and some wealthy elites had 9/11 foreknowledge? Why didn't this cause a storm of media attention and further investigation? September 6-10, 2001 (B): The Chicago Board Options Exchange sees suspicious trading on Merrill Lynch and Morgan Stanley, two of the largest WTC tenants. An average of 3,053 put options in Merrill Lynch are bought between September 6-10, compared to an average of 252 in the previous week. Merrill Lynch, another WTC tenant, see 12,215 put options bought between September 7-10, when the previous days had seen averages of 252 contracts a day. [Independent, 10/14/01] Dylan Ratigan of Bloomberg Business News: "This would be one of the most extraordinary coincidences in the history of mankind if it was a coincidence." [ABC News, 9/20/01] FTW September 10, 2001 (H): The trading ratio on United Airlines is 25 times greater than normal at the Pacific Exchange. Pacific Exchange officials later decline to state if this abnormality is being investigated. [San Francisco Chronicle, 9/19/01] September 10, 2001 (I): According to CBS News, in the afternoon before the attack, "alarm bells were sounding over unusual trading in the US stock options market." It has been documented that the CIA, the Mossad and many other intelligence agencies monitor stock trading in real time using highly advanced programs such as Promis. Both the FBI and the Justice Department have confirmed the use of such programs for US intelligence gathering through at least this summer. This would confirm that CIA should have had additional advance warning of imminent attacks against American and United Airlines planes. [CBS, 9/19/01] There are even allegations that bin Laden was able to get a copy of Promis. [Fox News, 10/16/01] FTW

by **chiggerbit** » Sat Jul 23, 2005 3:13 am

<a href="http://www.independent.co.uk/story.jsp?story=99402">www.independent.co.uk/sto...tory=99402</a>] Michael Eisenscher Nov 27, 2001 01:49 PST The Disappearing 911 Insider Trading Cases; CIA-Supported Website Shut Down From: NY-Trans-@tania.blythe-systems.com The Disappearing 911 Insider Trading Cases Via NY Transfer News * All the News That Doesn't Fit source - "Austin Kelley" <austin-@hotmail.com> INSIDER TRADING PROFITS off of 9-11 were frenzied over by the US media when they thought it was Arab terrorists ... but then the story mysteriously died. Until, the UK Independent reveals that it leads to a firm chaired by the 3rd highest man in the CIA (and stranger still is that $2.5 million of the "winnings" are still unclaimed. The Independent - Oct 14, 2001 <a href="http://www.independent.co.uk/story.jsp?story=99402">www.independent.co.uk/sto...tory=99402</a> Mystery of terror 'insider dealers' By Chris Blackhurst Share speculators have failed to collect $2.5m (#1.7m) in profits made from the fall in the share price of United Airlines after the 11 September World Trade Centre attacks. The fact that the money is unclaimed more than a month later has re-awakened investigators' interest in a story dismissed as coincidence. It may be that investors who were able to predict the share price crash so skilfully are reluctant to be seen profiting from tragedy. But investigators now wonder whether there is a more sinister explanation. The authorities are examining the possibility that if they knew what was coming, traders were intent on taking their profits immediately, before regulators had woken up to any possible scam. But investors failed to foresee that the first response of the US stock markets to the disaster was to suspend all trading for four days, thereby denying them the chance of cashing in their profits. Further details of the futures trades that netted such huge gains in the wake of the hijackings have been disclosed. To the embarrassment of investigators, it has also emerged that the firm used to buy many of the "put" options - where a trader, in effect, bets on a share price fall - on United Airlines stock was headed until 1998 by "Buzzy" Krongard, now executive director of the CIA. Until 1997, Mr Krongard was chairman of Alex Brown Inc, America's oldest investment banking firm. Alex Brown was acquired by Bankers Trust, which in turn was bought by Deutsche Bank. His last post before resigning to take his senior role in the CIA was to head Bankers Trust - Alex Brown's private client business, dealing with the accounts and investments of wealthy customers around the world. There is no suggestion that Mr Krongard had advance knowledge of the attacks. Between 6 and 7 September, the Chicago Board Options Exchange saw purchases of 4,744 "put" option contracts in UAL versus 396 call options - where a speculator bets on a price rising. Holders of the put options would have netted a profit of $5m (#3.3m) once the carrier's share price dived after 11 September. On 10 September, more trading in Chicago saw the purchase of 4,516 put options in American Airlines, the other airline involved in the hijackings. This compares with a mere 748 call options in American purchased that day. Investigators cannot help but notice that no other airlines saw such trading in their put options. It was not just airlines that were targeted by remarkably canny investors. One of the biggest occupants of the World Trade Centre was Morgan Stanley, the investment bank. In the first week of September, an average of 27 put option contracts was bought each day in its shares. The total for the three days before the attacks was 2,157. Merrill Lynch, another WTC tenant, saw 12,215 put options bought in the four days before the attacks, when the previous days had seen averages of 252 contracts a day. *

by **anonymouse** » Sat Jul 23, 2005 4:04 am

More Unusual Market Activity Reported Before Attacks by Laura Jacobs and Thomas Atkins Reuters September 20, 2001 CHICAGO/FRANKFURT- Chicago traders on Wednesday cited unusual activity in airline options up to a month before attacks on U.S. landmarks, and German bankers reported brisk activity in reinsurer Munich Re shares, adding to speculation that those behind the attacks tried to profit from their acts. The reports were the latest from U.S. and European traders that have triggered an investigation by financial regulators worried that the attacks may not only have killed thousands of people but those behind it profited from the carnage as well. The U.S. has said the prime suspect in the attacks on the World Trade Center in New York and the Pentagon in Washington is wealthy, Saudi-born dissident Osama bin Laden, believed to be hiding in Afghanistan. "We have received reports that those associated with the terrorist activities of last week may have sought to exploit our securities markets to profit from those activities,'' Stephen Cutler, the acting top enforcement officer at the U.S. Securities and Exchange Commission, said on Wednesday. "We are vigorously pursuing all credible leads, but at this time, we have drawn no conclusions.'' In Chicago, a market maker on the Chicago Board Options Exchange said there was some unusual buying in both the September and October 30 puts of United Airlines parent UAL Corp. days and even a month before the attack. "They bought them before (the attacks) and the month before, September 6 and August 6, the Oct and Sept 30 puts,'' he said. A put option gives the buyer the right to sell the underlying stock at a specific price during the option's life. Talk focused on stocks and options on UAL Corp and AMR Corp., the parent companies operating the two U.S. airline carriers whose jets were highjacked. While some industry analysts have said that the spike in volume could have been based on fundamental and economic reasons, one industry official familiar with the investigations said: "From what I'm hearing, it's more than coincidence.'' LARGE INQUIRIES IN GERMANY In Frankfurt, bankers also noticed unusual interest in stock-lending in shares of Munich Re, raising the possibility that at least one player may have prepared a short position with advance knowledge of an attack that would send the insurer's shares plummeting. One banker, who requested anonymity, said he had received three price inquiries from major French banks about borrowing abnormally large stakes -- millions of shares -- in Munich Re. The requests were never followed up with an actual share loan. "These inquiries were very big in size and they only asked about one share, and for that reason it stood out,'' he said. Borrowing stocks allows investors to go short, selling the borrowed shares in the anticipation that their price will fall, after which the investors purchase the shares more cheaply on the market and return them to the borrower minus a fee. "Shorting'' a stock, like buying a put option, is one way investors can make money in falling markets. Buying a stock option at gives an investor the right to buy (using a call option) or sell (using a put option) the stock at a later date for a set price, known as the strike price. Because options can be purchased for a relatively small amount, as they are leveraged instruments, investors betting on a falling share price could in theory, make vast amounts of money if the share weakens sharply. Before the attack, September and October 30 puts, which give an investor the right to sell 100 shares of UAL stock for $30 a share, were worth very little because UAL was trading above that price. But after the attack, UAL shares dropped below $20, making the options worth at least five times their pre-attack price. Another German banker said price inquiries for millions of shares in Munich Re should have sounded the alarm that something very unusual was underway. "If somebody would be looking for that many, it would be super-obvious. The share price would go through the floor. A normal request for Munich Re shares would be 50,000 or 100,000,'' said the banker, who also requested anonymity. "Even at 500,000 we would be immediately looking into the company to see if there was something fundamental going on, a takeover or some news,'' he added. EUROPEAN OPTIONS TRADES JUMP Separately, options traders in Europe also reported unusual activity in Munich Re shares before the attack but said it was not dramatic enough to sound an alarm, adding that a shrewd actor would not likely have used the open market in full view of regulators. Volatility in Munich Re shares increased sharply before the attack, jumping 30 percent from September 4 to September 7. Open interest -- the number of contracts outstanding on the underlying stock -- in Munich Re also jumped by 3,500 lots on the Friday before the attack, compared to daily average volume of 2,400. A spokesman for Eurex said the exchange, the world's largest derivatives exchange, had probed transactions in the days before and after the attack but found nothing to raise an alarm flag. On Tuesday, Chicago traders said they had detected unusually brisk trading volume in some options of AMR Corp, the parent company American Airlines. And in Amsterdam, Dutch traders said they had noticed unusually large volumes in options of the national airline KLM ahead of the attacks. Copyright © 2001 Reuters Limited. FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of criminal justice, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: <a href="http://www.law.cornell.edu/uscode/17/107.shtml.">www.law.cornell.edu/uscode/17/107.shtml.</a> If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

by **anonymouse** » Sat Jul 23, 2005 4:06 am

Data shows heavy airline-stock short selling - Christian Berthelsen, Chronicle Staff Writer Saturday, September 22, 2001 In another sign that some investors speculated against the stocks of airlines whose jets were used in terrorist attacks on New York and the Pentagon, there was a sharp increase in short selling of the stocks of American and United airlines during the month before Sept. 11. The trading activity far outpaced the rise in short selling for all stocks on the New York Stock Exchange -- or other major airline stocks as a group on the Big Board -- according to a computer analysis by The Chronicle of data released yesterday by the New York Stock Exchange. A short sale is essentially a financial market bet that the value of a particular stock will drop. In a successful short sale, an investor borrows the stock from a broker, sells it and then repurchases it at a lower price, returning the shares to their owner and turning a profit on the difference. Federal securities and law enforcement investigators have been looking at unusual trading activities in the stocks of AMR Corp. and UAL Corp., the parent companies of American and United, as well as a number of other securities in the days leading up to the terrorist attacks. Specifically, the investigators want to determine whether someone with advanced knowledge of what would happen was trying to profit on the ensuing financial downturn. The data released yesterday is part of the NYSE's regular monthly report on short-selling. It shows that investors shorted nearly 4.39 million shares of UAL in portions of August and September. That represented an increase of 1.25 million shares, or 40 percent over the previous month's level. Meanwhile, investors shorted more than 2.98 million shares of AMR, a jump of nearly 497,000 shares, or 20 percent above what it was in August. Those increases were far larger than the average shorting of stocks for the two companies' major competitors on the exchange, including Delta, Continental, US Airways and Southwest. As a group, the competitors saw an increase in shorting of only 11 percent. And shorting on the exchange overall totaled only a one percent increase. As reported previously, some of the suspicious trading under investigation by market monitors, the FBI and the Securities and Exchange Commission include an unusual spike in the purchase of "put" options on the stocks of AMR and UAL. A put is essentially a bet that the stock will decline, giving the buyer the right to sell the stock at a set price at a set time and delivering profits when the share price drops lower than the agreed sale price. To be sure, there are a number of legitimate reasons to account for the increase in short selling that have nothing to do with terrorism. For instance, the airline industry was in serious finance trouble even prior to the attacks, as business and consumer travel demand slacked off in a weakening economy. And both AMR and UAL posted huge second-quarter losses in July and said they could be in the red for the rest of the year. What's more, short-selling on the exchange has become increasingly prevalent. Each month has seen a record high, with a new peak of 5.98 billion shares shorted this month. Still, anyone shorting shares of AMR and UAL would have turned a strong profit. UAL closed yesterday at $17.13 per share, off 44 percent from its close of $30.82 the day before the attack. AMR is down 40 percent, closing at $17.90 yesterday from $29.70 on Sept. 10. Only one carrier, US Airways, saw a higher jump in short sales, with an increase of 41 percent. But there were obvious reasons to short that company: US Airways is laden with debt and was the target of a takeover bid from United that failed in July. As with put options, it is difficult to tell how much money was made in the short selling of UAL and AMR stocks without more specific information about sale and repurchase prices and dates of execution. E-mail Christian Berthelsen at cberthelsen@sfchronicle.com. Page C - 1 URL: <a href="http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/22/BU27558.DTL">sfgate.com/cgi-bin/articl...U27558.DTL</a>

by **anonymouse** » Sat Jul 23, 2005 4:08 am

SEC investigating airline stock deals: Investors bet against United, American San Francisco Chronicle 18 September 2001 by Christian Berthelsen URL: <a href="http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/18/MN63703.DTL">www.sfgate.com/cgi-bin/ar...N63703.DTL</a> In the days leading up to terrorist attacks on America, unknown investors made unusually large bets in the financial markets against the stocks of two companies that would come to be prominently associated with the disaster: United Airlines and American Airlines. That trading in United and other securities is the focus of investigations in several countries, including the United States and Germany, sources say. Investigators are looking into theories that someone with advance knowledge of the attacks, possibly even financiers of the terrorists themselves, sought to profit from the financial fallout. Using what is known in the options trading industry as a "put," investors bet heavily against United's parent, UAL Corp., on Sept. 6 and 7, and against American's parent, AMR Corp., on Sept. 10, in the three trading days before the attack. Put options are essentially market methods for profiting when an investor believes the price of a security will drop. No similar bets were made against the stocks of any of the companies' major competitors, including Delta, Continental, Northwest and Southwest. That would suggest that the investors had specific reason to believe UAL and AMR shares would drop. In addition, the trading ratio in UAL put options on the Thursday before the attack was 25 times its normal level, according to data from the Options Clearinghouse Corp. On Sept. 11, hijackers seized one American flight and one United flight and used them to demolish the World Trade Center's twin towers. A second American plane crashed into the Pentagon, while another United flight crashed in rural Pennsylvania after an apparent struggle between the hijackers and passengers. 'HEARD THOSE REPORTS' "We've heard those reports about terrorist involvement in our markets," said Harvey Pitt, chairman of the U.S. Securities and Exchange Commission, as quoted in the Wall Street Journal. "Our enforcement division has been looking into a variety of market actions that could be linked to these terrible acts, including the subjects of the rumors." SEC officials acknowledged the existence of the inquiry into put options but declined to elaborate about Pitt's comment or to discuss specific areas of inquiry. But a source familiar with the inquiry, who spoke only on condition of anonymity, confirmed that trading of UAL issues and those of other companies was under investigation by both market monitors and government regulators. The identities of the investors being investigated are not known to the public, but their trades can be traced easily by investigators. The evidence at this point is purely circumstantial. There are a number of reasons that the bets against UAL and AMR could have been legitimate or perhaps the product of insider trading with no connection to the terrorist plot. However, officials have launched a multinational investigation into the unusual trading of a number of securities in the days leading up to the attacks. What also has drawn attention was the short-selling of the stock of Munich Re, a German insurance company whose shares took a sharp and unexplainable tumble in the week before the attack. A short sale is when an investor borrows stock from a broker and sells it in the hope of repurchasing it at a lower price and profiting on the difference. There also was an increase in the number of put options on the Standard & Poor's 500 index, a broad measure of the market. A put contract is the purchase of an option at a price lower than the level at which the security is currently trading; if the security drops to that level, the investor profits on the fall. UNUSUALLY HIGH VOLUME Financial industry workers said they had noticed an unusual volume of put contracts in the days before the attack but thought they were seeing the natural result of a months-long deterioration in the market. Now, in light of the attacks, darker scenarios are being discussed. "I saw put-call numbers higher than I've ever seen in 10 years of following the markets, particularly the options markets," said John Kinnucan, a principal of Broadband Research, an independent telecommunications research firm. "When one sees this type of activity, the first thing one does is ask oneself, 'What is the explanation? What are people worried about?' " One explanation might be that the nation was already in the midst of an economic slowdown that was hurting the airline industry as travel demand slackened. In addition, AMR and UAL posted huge losses after the second quarter this summer and warned that their losses could continue through the end of the year; UAL's stock price hit a 52-week low of $30.39 Sept. 10, the day before the attack. But anyone betting against either airline would have profited handsomely in the days since. The attacks have hit the airline industry hard, and fleeing investors wiped out $12.2 billion in shareholder value in airlines yesterday alone. Meanwhile, a number of airlines have announced massive layoffs in an attempt to stay afloat. Among the hardest-hit stocks were UAL, which fell $13.32, or 43 percent, to close at $17.50, and AMR, which fell $11.70, or 39 percent, to close at $18. A spokeswoman for United Airlines said she did not have enough information to comment about the inquiry, and a spokeswoman at American said she had been told not to take calls seeking information on the matter. The purchase of UAL put contracts on the Thursday before the attack was about 25 times normal levels so far this year, and on Friday it was about eight times normal. Investors this year have on average bought fewer than 200 put contracts per day on UAL stock. By contrast, on Sept. 6 investors bought 3,150 contracts, followed by 2,194 purchases the next day. On the Thursday that 3,150 put contracts were purchased, the Pacific Exchange in San Francisco saw volume three times its normal levels, to 1,500 contracts. The following day saw an increase in trading volume at the Chicago Board of Options Exchange in UAL options. The purchase of AMR puts on the day before the attacks was about 10 times the normal level so far this year, with 4,556 put contracts purchased. That was nearly double the normal volume going through the Philadelphia exchange. A spokeswoman for the Philadelphia exchange said the market monitors there detected nothing unusual about the trading. Using the U.S. financial system to underwrite attacks on it would be in keeping with at least one previous boast during an altercation between the United States and a Middle Eastern country. During the 1991 Gulf War, Saddam Hussein said Iraq would kill American soldiers "with their own bullets" after the United States supplied Iraq with weapons and training in the belief that Iraq would be a Middle East ally. E-mail Christian Berthelsen at cberthelsen@sfchronicle.com. Because of its importance to the events of September 11, 2001, this article has been archived by by the 911truth.org Reading Room FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of criminal justice, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: <a href="http://www.law.cornell.edu/uscode/17/107.shtml.">www.law.cornell.edu/uscode/17/107.shtml.</a> If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

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