Attached please find articles of interest related to option trading prior to 9/11.
FBI Concludes No Terrorist Insider Trading Occurred in U.S.
2003-09-18 11:56 (New York)
FBI Concludes No Terrorist Insider Trading Occurred in U.S.
Sept. 18 (Bloomberg) -- U.S. criminal investigators have
concluded that there was no insider trading in U.S. securities
markets by people with advance knowledge of the Sept. 11
terrorist attacks of 2001, an FBI spokesman said.
The Federal Bureau of Investigation found that a pre-attack
surge of trading in options that bet on a drop in the stock of
AMR Corp., which owns American Airlines, and UAL Corp., which
owns United Airlines, was not linked to terrorists, FBI spokesman
Paul Bresson said in an e-mail to Bloomberg News.
The two airlines owned the jets that terrorists commandeered
and then crashed into the World Trade Center in New York and the
Pentagon outside Washington. The FBI investigated possible
insider trading on airline and insurance securities in a search
for accomplices who might have tried to profit from the attacks.
``The vast majority of trading was conducted by investment
hedge funds implementing bearish investment strategies or hedging
a line position of common stock,'' the e-mail said. ``No criminal
violation or intelligence linking the matter to terrorist
activity was identified.''
Bresson didn't identify the hedge funds or any insurance
company. Bresson's e-mail came in response to a Bloomberg inquiry
about the status of the investigation.
Numerous Interviews
``We conducted numerous interviews of witnesses and trading
professionals,'' Bresson wrote. ``Documents including trading
records and SEC data were also recovered and reviewed. These
documents detail transactions occurring before and after the 9/11
attack. The investigative efforts did not identify any
involvement by terrorists in short selling or trading of put
options,'' which let investors bet that a stock will decline.
Bresson said the matter was also ``extensively reviewed'' by
the U.S. Attorney's Office in the Southern District of New York
and by the U.S. Securities and Exchange Commission.
Lorie Van Auken, the widow of a Cantor Fitzgerald LP bond
trader who died in the Sept. 11 attacks, said the FBI told her
and other victims' relatives about the conclusion in July. The
FBI declined to name the hedge funds when asked by the relatives,
Van Auken said in an interview from her home in New Jersey.
``I have a problem with that answer,'' Van Auken said ``If
there's nothing to hide, then why can't they tell us?''
Options trading statistics examined by Bloomberg News in the
weeks after Sept. 11, 2001, showed a surge of trading in the days
before the attacks.
Options Trading
On Sept. 10, 2001, for example, 1,535 contracts changed
hands on options that let investors profit if AMR stock fell
below $30 per share before the following Oct. 20. That was almost
five times the total number of those Oct. 20 put options that
traded before Sept. 10, according to Bloomberg data.
AMR closed at $29.70 the day before the terrorist attacks
and fell as much as 47 percent to $15.90 when trading resumed on
Sept. 17, 2001. UAL, which closed at $30.82 on Sept. 10, 2001,
fell as much as 43 percent to $17.50 when U.S. equity markets
reopened a week later.
The FBI said in January 2002 that Spanish authorities had
uncovered evidence pointing to possible terrorist trading and
that the FBI was assisting with that investigation.
Bresson's e-mail didn't answer a question about the status
of the Spanish probe and officials at the Spanish Interior
Ministry declined to comment.
--Judy Mathewson in Washington at (1) 202-624-1915 or
jmathewson@bloomberg.net with reporting by Paul Tobin in Madrid.
Editor: Parry
Story illustration: For more information on the surge in trading
of bearish options before the attacks, see: ``CBOE, Philadelphia
Probed Possible Terrorist Trades'' story of 9/24/01.
AMR US
CN
UALAQ US CN
NI US
NI OPTIONS
NI NYSE
NI EXC
NI GOV
NI CBOE
NI SCR
NI AIR
NI INS
NI SCR
NI SEC
NI CRIME
NI TERROR
NI FBI
NI DRV
NI LAW
#<610523.796641>#
-0- (BN ) Sep/18/2003 15:56 GMT
Report: Sept. 11 attacks, stock gains not linked
High volume has other explanations
By Andrew Countryman
Tribune staff reporter
Published July 23, 2004
Despite concerns that arose after the Sept. 11 terrorist attacks, investigators said Thursday that they found no evidence that anyone profited from
stock and options trading based on advance knowledge of the attacks.
Shortly after the attacks, reports emerged that in the days leading up to Sept. 11, some traders placed unusually large bets for stock prices to fall
at several firms, particularly for the parent companies of United and American Airlines, whose planes were hijacked and used in the attacks.
That prompted speculation that some people who knew about the attacks also had sought to make a quick buck.
Before the attacks, volume in put options and short selling, which make money when a stock price falls, had spiked for United parent UAL Corp.,
American parent AMR Corp. and plane giant Boeing Co. Traders also reported heavier-than-usual volume in several hotel stocks, which were also
vulnerable to a sharp drop-off in travel.
Stocks indeed sank when markets reopened after the attacks, with shares of UAL dropping 43 percent on the day trading resumed and AMR's shares
falling 39 percent.
Tribune research had put the potential profits from the UAL options trading alone at more than $4 million.
But in its long-awaited report released Thursday, the bipartisan 9/11 commission said each trade had "an innocuous explanation."
The commission said an unidentified U.S. institutional investor "with no conceivable ties to Al Qaeda" bought 95 percent of UAL put options on Sept.
6, when volume soared, as part of a trading strategy that also saw it buy shares of AMR. The panel attributed a sharp climb in AMR put options volume
on Sept. 10 to a recommendation in an options-trading newsletter.
The commission said investigators at the FBI, the Securities and Exchange Commission and other agencies "devoted enormous resources to investigating
this issue," with the help of foreign governments.
The SEC said it examined more than 9.5 million transactions involving 103 companies in various industries, along with trading in several index
products.
"We did not develop any evidence suggesting that anyone who had advance knowledge of the Sept. 11 attacks traded on the basis of that information,"
the SEC said in a statement.
Statement Concerning SEC Terrorist Attack Trading Investigation
FOR IMMEDIATE RELEASE
2004-98
Washington, D.C., July 22, 2004 - The National Commission On Terrorist Attacks Upon the United States (the 9-11 Commission) has submitted its final
report, which includes its review and conclusions concerning whether any trading in the United States securities markets was based on advance
knowledge of the September 11 attacks. The United States Securities and Exchange Commission cooperated fully with the 9-11 Commission and provided
information based on the following actions.
On Sept. 12, 2001, the Securities and Exchange Commission began an investigation to determine whether there was evidence that anyone who had advance
knowledge of the terrorist attacks on September 11 sought to profit from that knowledge by trading in United States securities markets. In the course
of that review, we did not develop any evidence suggesting that anyone who had advance knowledge of the September 11 attacks traded on the basis of
that information. In the course of our investigation, we examined more than 9.5 million securities transactions that took place during the weeks
preceding September 11. Along with the New York Stock Exchange, NASD, the American Stock Exchange, the Chicago Board Options Exchange, the Pacific
Exchange, and the Philadelphia Stock Exchange, we reviewed trading in securities and derivative products of 103 companies in six industry groups with
trading in seven markets. We also reviewed trading in 32 exchange traded funds and broad and narrow indices. In addition to working with the exchanges
and NASD, we worked with criminal law enforcement authorities, including the Department of Justice and the FBI, as well as our regulatory counterparts
in the U.S. and abroad. Finally, we sought and obtained information from the legal and compliance departments at securities firms and other financial
institutions to determine whether any unusual trading activity had been observed by their staffs in the period prior to Sept. 11, 2001.
www.sec.gov...
