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REPORT: Wall Street Traders With Prior Knowledge Of Oct. 7th Attack Reaped The Profits

A US study revealed an unusual volume of transactions at the New York and Tel Aviv stock exchanges that gambled on the collapse of the Israeli stock market a week before the October 7th attack, The Marker revealed for the first time on Monday

The report was based on a study called Trading on Terror?, carried out by two of the greatest US experts in the field of securities law: Prof. Robert Jackson Jr. of New York University, formerly one of the heads of the American Securities and Exchange Commission (SEC), and Prof. Joshua Mitts of Columbia University, an expert in short transactions.

A short trade is a trade in which a trader “bets” against the performance of a stock or some asset, and profits when its value falls. The researchers examined short transactions carried out in the MSCI Israel Exchange Traded Fund (ETF) and Israeli companies listed in the US and on the Tel Aviv Stock Exchange.

The examination found strong signs that investors expected that a cataclysmic event would occur in early October that would lead to the collapse of the Israeli stock market.

On October 2, about a quarter of a million transactions were made that expected a drop in Israeli stocks, compared to a few thousand per day in the previous month.

The shorted shares included the stocks of Bank Poalim, Bank Leumi, Bank Discount, Bank Mizrachi-Tefachot, and companies such as Teva, Elbit, and ICL.

“The short selling far exceeded the short selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic,” the researchers wrote. “Similarly, we identify increases in short selling before the attack in dozens of Israeli companies traded in Tel Aviv.”

“For one Israeli company alone, 4.43 million new shares sold short over the September 14 to October 5 period yielded profits of NIS 3.2 billion ($890 million) on that additional short selling.”

“Although we see no aggregate increase in shorting of Israeli companies on US exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks. We identify similar patterns in the Israeli ETFs at times when it was reported that Hamas was planning to execute a similar attack as in October.”

“Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in the gaps of US and international enforcement of legal prohibitions on informed trading.”

(YWN Israel Desk – Jerusalem)

10 Responses

  1. And those idiots from the religious parties and Likud who commented last week that they supported Netanyahu continuing as PM after the “war was over”. And Bibi continues pointing the finger at the IDF and the intelligence services for the failure to take these Hamas plans seriously.

  2. This is anti semetic rubbish.
    Any uptick in trades coincided with Jews wanting to finish up trades and loose ends before Succos started.
    A bunch of hogwash.

  3. If an investor (e.g. brokerage, hedge fund, etc.) has knowledge of a criminal event that is yet to happen, while it may not violate securities laws, it makes them an accessory before the fact and subject to criminal prosecution.

    It should be noted there were good reasons to “short” Israeli stocks prior to Oct. 7 due to the domestic politics in Israel, where the economic elites were “at war” with the political elites.

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