Millions of shares sold before disaster

Millions of shares sold before disaster
Wed Sep 19 12:35:26 2001

Stocks inquiry
Millions of shares sold before disaster
THE CIA has asked the City regulators in London to investigate
suspicious sales of millions of shares before last Tuesday’s attacks
in America in the belief that the paper trail will lead to the terrorists.

American authorities are investigating unusually large numbers of
shares in airlines, insurance companies and arms manufacturers that
were sold off in the days and weeks before the attacks.

They believe that the sales were by people who knew about the
impending disaster.

The investigators are looking at so-called “short selling” transactions
in several financial centres across the world involving shares that
dropped dramatically after the attack.

Short selling involves borrowing shares, selling them to a third party,
then buying them back when the price falls. Large profits can be
made if a share price falls significantly after it has been sold to the
third party.

The Financial Services Authority (FSA), the stock market
watchdog, was drawn into the investigation because it has a
transaction monitoring department that checks suspicious share

The FSA would not comment on its instructions from the CIA, but
said that its team of specialists would do all they could to help the
investigation. A spokesman said: “The financial authorities have
great expertise in this field and could have a big part to play. It is
something that is incumbent upon us all to look at to the best of our

Market regulators in Germany, Japan and the US received
information of short selling of insurance company shares, airline
stocks and shares in arms companies — all of which have fallen
since the attack. Italian, French and Swiss regulators have also
joined the investigation.

Munich Re, Swiss Re and Axa, all insurance companies, are also
helping the authorities with the inquiries as large numbers of their
shares were short-sold before the attack.

A spokesman for Axa, a French company, said: “We have informed
the market regulators in Paris that there are concerns about short

Richard Crossley, an analyst at Teather & Greenwood, a City
broker, said that he had tracked suspicious short selling and share
dumping in a swath of stocks badly affected by the terrorist attacks.

He said that on the Friday before the attacks, more than 10 million
shares in Merrill Lynch, the US investment bank, were sold
compared with 4 million on a normal day. He added that
exceptionally high volumes of retail and leisure stocks had also
caught his attention.

“Before the attacks there was no pattern to this phenomenon,” he
said. “The shares that were sold were doing very well and someone
was selling them in very large quantities with no real reason.”

Mr Crossley believes that someone with inside knowledge of the
attacks could have been making money on its expected outcome for
up to three weeks before the terrorists struck.

“What is more awful than he should aim a stiletto blow at the heart
of Western financial markets? But to profit from it. Words fail me,”
Mr Crossley said.,,2001320007-2001323297,00.html site down 12/08

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