The evidence as yet is nothing but circumstantial, one investigator said, adding that both the Securities and Exchange Commission in the United States and officials in Germany had begun examining the transactions. A German official said that a preliminary investigation had not found any irregularities.
“We’ve heard those reports about terrorist involvement in our markets,” said Harvey Pitt, chairman of the Securities and Exchange Commission. “Our enforcement division has been looking into a variety of market actions that could be linked to the terrible acts, including the subjects of the rumors.”
A person with advance knowledge of the hijackings could profit by selling short the stock of vulnerable companies, insurers for example. Individuals who believe a stock will decline can borrow and sell shares and pocket the money, hoping to buy the shares back later at a lower price. Another way to profit in a declining market is to buy put options that grow more valuable as prices drop.
The possibly suspicious activity includes trading in European insurance companies, in the shares of an American electronic-trading network that was based in the World Trade Center, and in put options on the Standard & Poor’s 500-stock index.
German securities watchdog BaWe on Monday said it had launched a probe into possible short selling of German shares amid speculation that reinsurer Munich Re shares could have been sold in advance by those involved in Tuesday’s U.S. terror attacks.
Japan’s securities watchdog has said it is investigating trading around the time of last week’s terror attacks in the United States to see if any transactions were linked to Islamic militant Osama bin Laden.
Meantime, Italy’s defense minister said the group behind the terror attacks in the United States may have speculated on stock markets beforehand.
There was surprisingly heavy put volume in one series of options on the S&P 500 index on Monday. Options to sell the index at a level of 1,050, which expire on Sept. 21, closed on Monday at $7.50. The S&P closed that day at 1,092.54.
