Category Archives: Insider trading

Evidence of Insider Trading on the Attacks of September 11

Evidence of Insider Trading on the Attacks of September 11
Did Investors have foreknowledge of the attacks?

By Kevin Ryan, Global Research

Just after September 11th 2001, many governments began investigations into possible insider trading related to the terrorist attacks of that day.  Such investigations were initiated by the governments of Belgium, Cyprus, France, Germany, Italy, Japan, Luxembourg, Monte Carlo, the Netherlands, Switzerland, the United States, and others.  Although the investigators were clearly concerned about insider trading, and considerable evidence did exist, none of the investigations resulted in a single indictment.  That’s because the people identified as having been involved in the suspicious trades were seen as unlikely to have been associated with those alleged to have committed the 9/11 crimes.

This is an example of the circular logic often used by those who created the official explanations for 9/11.  The reasoning goes like this: if we assume that we know who the perpetrators were (i.e. the popular version of “al Qaeda”) and those who were involved in the trades did not appear to be connected to those assumed perpetrators, then insider trading did not occur.

That’s basically what the 9/11 Commission told us.  The Commission concluded that “exhaustive investigations” by the SEC and the FBI “uncovered no evidence that anyone with advance knowledge of the attacks profited through securities transactions.”  What they meant was that someone did profit through securities transactions but, based on the Commission’s assumptions of guilt, those who profited were not associated with those who were guilty of conducting the attacks.  In a footnote, the Commission report acknowledged “highly suspicious trading on its face,” but said that this trading on United Airlines was traced back to “A single U.S.-based institutional investor with no conceivable ties to al Qaeda.”[1]

With respect to insider trading, or what is more technically called informed trading, the Commission report was itself suspect for several reasons.  First, the informed trades relating to 9/11 covered far more than just airline company stock.  The stocks of financial and reinsurance companies, as well as other financial vehicles, were identified as being associated with suspicious trades.  Huge credit card transactions, completed just before the attacks, were also involved.  The Commission ultimately tried to frame all of this highly suspicious trading in terms of a series of misunderstandings.  However, the possibility that so many leading financial experts were so completely wrong is doubtful at best and, if true, would constitute another unbelievable scenario in the already highly improbable sequence of events represented by the official story of 9/11.

In the last few years, new evidence has come to light on these matters.  In 2006 and 2010, financial experts at a number of universities have established new evidence, through statistical analyses, that informed trades did occur with respect to the 9/11 attacks.  Additionally, in 2007, the 911 Commission released a memorandum summary of the FBI investigations on which its report was based.[2] A careful review of this memorandum indicates that some of the people who were briefly investigated by the FBI, and then acquitted without due diligence, had links to al Qaeda and to US intelligence agencies.  Although the elapsed time between the informed trades and these new confirmations might prevent legal action against the guilty, the facts of the matter can help lead us to the truth about 9/11.

Early signs

Within a week of the attacks, Germany’s stock market regulator, BAWe, began looking into claims of suspicious trading.[3] That same week, Italy’s foreign minister, Antonio Martino, made it clear that he had concerns by issuing this public statement: “I think that there are terrorist states and organisations behind speculation on the international markets.”[4]

Within two weeks of the attacks, CNN reported that regulators were seeing “ever-clearer signs” that someone “manipulated financial markets ahead of the terror attack in the hope of profiting from it.”  Belgian Finance Minister, Didier Reynders, said that there were strong suspicions that British markets were used for transactions.[5] The CIA was reported to have asked the British regulators to investigate some of the trades.[6] Unfortunately, the British regulator, The Financial Services Authority, wrote off its investigation by simply clearing “bin Laden and his henchmen of insider trading.”[7]

Conversely, German central bank president, Ernst Welteke, said his bank conducted a study that strongly indicated “terrorism insider trading” associated with 9/11.  He stated that his researchers had found “almost irrefutable proof of insider trading.”[8] Welteke suggested that the insider trading occurred not only in shares of companies affected by the attacks, such as airlines and insurance companies, but also in gold and oil. [9]

The extent of the 9/11-related informed trading was unprecedented.  An ABC News Consultant, Jonathan Winer, said, “it’s absolutely unprecedented to see cases of insider trading covering the entire world from Japan to the US to North America to Europe.”[10]

By October 2001, the Chicago Board Options Exchange (CBOE) and the four other options exchanges in the US had joined forces with the FBI and the Securities and Exchange Commission (SEC) to investigate a list of 38 stocks, as well as multiple options  and Treasury bonds, that were flagged in relation to potential informed trades.  SEC Chairman Harvey Pitt gave testimony to the House Financial Services Committee at the time, saying, “We will do everything in our power to track those people down and bring them to justice.”[11]

Mary Bender, chief regulatory officer at the CBOE, stated “We’ve never really had anything like this, [the option exchanges are] using the same investigative tools as we would in an insider-trading case. The point is to find people who are connected to these heinous crimes.”

The people ultimately found included an unnamed customer of Deutsche Bank Alex. Brown (DBAB).  This involved a trade on United Airlines (UAL) stock consisting of a 2,500-contract order that was, for some reason, split into chunks of 500 contracts each and then directed to multiple exchanges around the country simultaneously.[12] When the 9/11 Commission report pointed to a “single U.S.-based institutional investor with no conceivable ties to al Qaeda,” it was referring to either DBAB or its customer in that questionable trade.

Michael Ruppert has since written about DBAB, noting that the company had previously been a financier of The Carlyle Group and also of Brown Brothers Harriman, both of which are companies closely related to the Bush family.  Ruppert also noted that Alex. Brown, the company purchased by Deutsche Bank to become DBAB, was managed by A.B. (Buzzy) Krongard, who left the firm in 1998 to join the CIA as counsel to director George Tenet.[13] Krongard had been a consultant to CIA director James Woolsey in the mid 1990s and, on September 11th, he was the Executive Director of the CIA, the third highest position in the agency. 

Stock and Treasury bonds traded

In 2002, investigator Kyle Hence wrote about the stocks involved in the SEC’s target list.  Those that had the highest examples of trade volume over the average were UAL [285 times over average], Marsh & McLennan (Marsh) [93 times over average], American Airlines (AMR) [60 times over average], and Citigroup [45 times over average].[14] Other stocks flagged included financial firms, defense-related companies, and the reinsurance firms Munich Re, Swiss Re and the AXA Group.  Put options for these reinsurance firms, or bets that the stock would drop, were placed at double the normal levels in the few days before the attacks.  Regulators were concerned about “large block trades” on these stocks because the three firms were liable for billions in insurance payouts due to the damage inflicted on 9/11.[15]

The four highest-volume suspect stocks — UAL, Marsh, AMR and Citigroup — were closely linked to the attacks of 9/11.  The two airline companies each had two planes hijacked and destroyed.  Marsh was located in the exact 8 floors out of 110 in the north tower of the WTC where Flight 11 impacted and the fires occurred.  Citigroup was the parent of Travelers Insurance, which was expected to see $500 million in claims, and also Salomon Smith Barney, which occupied all but ten floors in World Trade Center (WTC) building 7.  Oddly enough, Salomon Smith Barney had both Donald Rumsfeld and Dick Cheney on its advisory board until January 2001.

Marsh occupied a number of floors in the south tower as well.  This is where the office of Marsh executive, L. Paul Bremer, was located.  Bremer was a former managing director at Kissinger Associates and had just completed leading a national terrorism commission in 2000.  The San Francisco Chronicle noted that Bremer was a source of early claims that rich Arabs were financing Osama bin Laden’s terrorist network.  In an article on the 9/11 informed trades, the Chronicle reported that “The former chairman of the State Department’s National Commission on Terrorism, L. Paul Bremer, said he obtained classified government analyses early last year of bin Laden’s finances confirming the assistance of affluent Middle Easterners.”[16]

On the day of 9/11, Bremer was interviewed by NBC News and stated that he believed Osama bin Laden was responsible and that possibly Iraq and Iran were involved too, and he called for the most severe military response possible.  For unknown reasons, Google removed the interview video from its servers three times, and blocked it once.[17]

The trading of Treasury bonds just before 9/11 was also flagged as being suspicious.  Reporters from The Wall street Journal wrote that the “U.S. Secret Service contacted a number of bond traders regarding large purchases of five-year Treasury notes before the attacks, according to people familiar with the probe. The investigators, acting on a tip from traders, are examining whether terrorists, or people affiliated with terrorist organizations, bought five-year notes, including a single $5 billion trade.”[18]

Some reports claimed that the 9/11 informed trades were such that millions of dollars were made, and some of that went unclaimed. [19] Others suggested that the trades resulted in the winning of billions of dollars in profits.  One such suggestion was made by the former German Minister of Technology, Andreas von Buelow, who said that the value of the informed trades was on the order of $15 billion.[20]

The FBI Investigations

In May 2007, a 9/11 Commission document that summarized the FBI investigations into potential 9/11-related informed trading was declassified. [21] This document was redacted to remove the names of two FBI agents from the New York office, and to remove the names of select suspects in the informed trading investigations.  The names of other FBI agents and suspects were left in.  Regardless, some information can be gleaned from the document to help reveal the trades and traders investigated.

On September 21, 2001, the SEC referred two specific transactions to the FBI for criminal investigation as potential informed trades.  One of those trades was a September 6, 2001 purchase of 56,000 shares of a company called Stratesec, which in the few years before 9/11 was a security contractor for several of the facilities that were compromised on 9/11.  These facilities included the WTC buildings, Dulles airport, where American Airlines Flight 77 took off, and also United Airlines, which owned two of the other three ill-fated planes.

The affected 56,000 shares of Stratesec stock were purchased by a director of the company, Wirt D. Walker III, and his wife Sally Walker.  This is clear from the memorandum generated to record the FBI summary of the trades investigated.[22] The Stratesec stock that the Walkers purchased doubled in value in the one trading day between September 11th and when the stock market reopened on September 17th.  The Commission memorandum suggests that the trade generated a profit of $50,000 for the Walkers.  Unfortunately, the FBI did not interview either of the Walkers and they were both cleared of any wrongdoing because they were said to have “no ties to terrorism or other negative information.” [23]

However, Wirt Walker was connected to people who had connections to al Qaeda.  For example, Stratesec director James Abrahamson was the business partner of Mansoor Ijaz, who claimed on several occasions to be able to contact Osama bin Laden.[24] Additionally, Walker hired a number of Stratesec employees away from a subsidiary of The Carlyle Group called BDM International, which ran secret (black) projects for government agencies.  The Carlyle Group was partly financed by members of the bin Laden family.[25] Mr. Walker ran a number of suspicious companies that went bankrupt, including Stratesec, some of which were underwritten by a company run by a first cousin of former CIA director (and President) George H.W. Bush.  Additionally, Walker was the child of a CIA employee and his first job was at an investment firm run by former US intelligence guru, James “Russ” Forgan, where he worked with another former CIA director, William Casey.[26] Of course, Osama bin Laden had links to the CIA as well.[27]

Another trade investigated by the FBI, on request from the SEC, focused on Amir Ibrahim Elgindy, an Egyptian-born, San Diego stock advisor who on the day before 9/11 had allegedly attempted to liquidate $300,000 in assets through his broker at Salomon Smith Barney.  During the attempted liquidation, Elgindy was said to have “predicted that the Dow Jones industrial average, which at the time stood at about 9,600, would soon crash to below 3,000.”[28]

The 9/11 Commission memorandum suggests that the FBI never interviewed Mr. Elgindy either, and had planned to exonerate him because there was “no evidence he was seeking to establish a position whereby he would profit from the terrorist attacks.”  Apparently, the prediction of a precipitous drop in the stock market, centered on the events of 9/11, was not sufficient cause for the FBI to interview the suspect.

In late May 2002, Elgindy was arrested along with four others, including an FBI agent and a former FBI agent, and charged with conspiracy to manipulate stock prices and extort money from companies.  The FBI agents, Jeffrey A Royer and Lynn Wingate, were said to have “used their access to F.B.I. databases to monitor the progress of the criminal investigation against Mr. Elgindy.”[29] A federal prosecutor later accused Elgindy, who also went by several aliases, of having prior knowledge of the 9/11 attacks.  Although the judge in that case did not agree with the prosecutor on the 9/11 informed trading accusation, Mr. Elgindy was eventually convicted, in 2005, of multiple crimes including racketeering, securities fraud, and making false statements.

The Boston office of the FBI investigated stock trades related to two companies.  The first was Viisage Technologies, a facial recognition company that stood to benefit from an increase in terrorism legislation.  The Viisage purchase, made by a former employee of the Saudi American Bank, “revealed no connection with 9/11.”  However, the Saudi American Bank was named in a lawsuit brought by the 9/11 victims’ families due to the bank having — “financed development projects in Sudan benefiting bin Laden in the early 1990s.”[30]

The second company investigated by the Boston FBI office was Wellington Management, a company that allegedly held a large account for Osama bin Laden.  The FBI found that Wellington Management maintained an account for “members of the bin Laden family” but dropped the investigation because it could not link this to “Osama, al Qaeda, or terrorism.”[31]

Although the connections to al Qaeda in three of these cases (Walker, the Viisage trader, and Wellington Management) can be seen as circumstantial, the amount of such evidence is considerable.  The quality of the FBI investigations, considering the suspects were not even interviewed, was therefore much less than “exhaustive”, as the 9/11 Commission characterized it.

The summary of FBI investigations released by the 9/11 Commission also described how the Commission questioned the FBI about damaged computer hard drives that might have been recovered from the WTC.  This questioning was the result of “press reports [contending] that large volumes of suspicious transactions flowed through the computers housed in the WTC on the morning of 9/11 as part of some illicit but ill-defined effort to profit from the attacks.”[32] The Commission came to the conclusion that no such activity occurred because “the assembled agents expressed no knowledge of the reported hard-drive recovery effort” and “everything at the WTC was pulverized to near powder, making it extremely unlikely that any hard-drives survived.”

The truth, however, is that many such hard-drives were recovered from the WTC and were sent to specialist companies to be cleaned and have data recovered.  A German company named Convar did a good deal of the recovery work.

In December 2001, Reuters reported that “Convar has recovered information from 32 computers that support assumptions of dirty doomsday dealings.” Richard Wagner, a data retrieval expert at Convar, testified that “There is a suspicion that some people had advance knowledge of the approximate time of the plane crashes in order to move out amounts exceeding $100 million.  They thought that the records of their transactions could not be traced after the main frames were destroyed.”  Director of Convar, Peter Henschel, said that it was “not only the volume, but the size of the transactions [that] was far higher than usual for a day like that.”[33]

By late December 2001, Convar had completed processing 39 out of 81 drives, and expected to receive 20 more WTC hard drives the next month.  Obviously, the 911 Commission memorandum drafted in August 2003 was not particularly reliable considering it reported that the FBI and the 911 Commission had no knowledge of any of this.

Statistical confirmations

Considering that the FBI and 9/11 Commission overlooked the suspicious connections of informed trading suspects like Wirt Walker, and also claimed in 2003 to have no knowledge of hard drive recoveries publicly reported in 2001, we must assume that they did a poor job of investigating.  Today, however, we know that several peer-reviewed academic papers have reported solid evidence that informed trades did occur.  That is, the conclusions reached by the official investigations have now been shown, through scientific analysis, to be quite wrong.

In 2006, a professor of Finance from the University of Illinois named Allen Poteshman published an analysis of the airline stock option trades preceding the attacks.  This study came to the conclusion that an indicator of long put volume was “unusually high which is consistent with informed investors having traded in the option market in advance of the attacks.”[34] Long puts are bets that a stock or option will fall in price.

The unusually high volume of long puts, purchased on UAL and AMR stock before these stocks declined dramatically due to the 9/11 attacks, are evidence that the traders knew that the stocks would decline.  Using statistical techniques to evaluate conditional and unconditional distributions of historical stock option activity, Professor Poteshman showed that the data indicate that informed trading did occur.

In January 2010, a team of financial experts from Switzerland published evidence for at least thirteen informed trades in which the investors appeared to have had foreknowledge of the attacks.  This study focused again on a limited number of companies but, of those, the informed trades centered on five airline companies and four financial companies.  The airline companies were American Airlines, United Airlines and Boeing.  Three of the financial companies involved were located in the WTC towers and the fourth was Citigroup, which stood to lose doubly as the parent of both Travelers Insurance and the WTC 7 tenant, Salomon Smith Barney.[35]

More recently, in April 2010, an international team of experts examined trading activities of options on the Standard & Poors 500 index, as well as a volatility index of the CBOE called VIX.  These researchers showed that there was a significant abnormal increase in trading volume in the option market just before the 9/11 attacks, and they demonstrated that this was in contrast to the absence of abnormal trading volume over periods long before the attacks.  The study also showed that the relevant abnormal increase in trading volume was not simply due to a declining market.[36] Their findings were “consistent with insiders anticipating the 9-11 attacks.”

Conclusion

In the early days just after 9/11, financial regulators around the world gave testimony to unprecedented evidence for informed trading related to the terrorist attacks of that day.  One central bank president (Welteke) said there was irrefutable proof of such trading.  This evidence led US regulators to vow, in Congressional testimony, to bring those responsible to justice.  Those vows were not fulfilled, as the people in charge of the investigations let the suspects off the hook by conducting weak inquiries and concluding that informed trading could not have occurred if it was not done directly by Osama bin Laden or al Qaeda.

The “exhaustive investigations” conducted by the FBI, on which the 9/11 Commission report was based, were clearly bogus.  The FBI did not interview the suspects and did not appear to compare notes with the 9/11 Commission to help make a determination if any of the people being investigated might have had ties to al Qaeda.  The Commission’s memorandum summary suggests that the FBI simply made decisions on its own regarding the possible connections of the suspects and the alleged terrorist organizations.  Those unilateral decisions were not appropriate, as at least three of the suspected informed trades (those of Walker, the Viisage trader, and Wellington Management) involved reasonably suspicious links to Osama bin Laden or his family.  Another suspect (Elgindy) was a soon-to-be convicted criminal who had direct links to FBI employees who were later arrested for securities-related crimes.

The FBI also claimed in August 2003 that it had no knowledge of hard drives recovered from the WTC, which were publicly reported in 2001.  According to the people who retrieved the associated data, the hard drives gave evidence for “dirty doomsday dealings.”

The evidence for informed trading on 9/11 includes many financial vehicles, from stock options to Treasury bonds to credit card transactions made at the WTC just before it was destroyed.  Today we know that financial experts from around the world have provided strong evidence, through established and reliable statistical techniques, that the early expert suspicions were correct, and that 9/11 informed trading did occur.

People knew in advance about the crimes of 9/11, and they profited from that knowledge.  Those people are among us today, and our families and communities are at risk of future terrorist attacks and further criminal profiteering if we do not respond to the evidence.  It is time for an independent, international investigation into the informed trades and the traders who benefited from the terrorist acts of September 11th.

Notes

[1] National Commission on the Terrorist Attacks Upon the United States, The 9/11 Commission Report, July 2004, p 172, and Chapter 5, footnote 130, http://govinfo.library.unt.edu/911/report/911Report.pdf

[2] 9/11 Commission memorandum entitled “FBI Briefing on Trading”, prepared by Doug Greenburg, 18 August 2003, http://media.nara.gov/9-11/MFR/t-0148-911MFR-00269.pdf

[3] Dave Carpenter, Exchange examines odd jump: Before attack: Many put options of hijacked planes’ parent companies purchased , The Associated Press, 18 September 2001,http://911research.wtc7.net/cache/sept11/cjonline_oddjump.html

[4] BBC News, Bin Laden ‘share gains’ probe, 18 September 2001, http://news.bbc.co.uk/2/hi/business/1548118.stm

[5] Tom Bogdanowicz and Brooks Jackson, Probes into ‘suspicious’ trading, CNN, 24 September 2001,http://web.archive.org/web/20011114023845/http://fyi.cnn.com/2001/WORLD/europe/09/24/gen.europe.shortselling/

[6] James Doran, Insider Trading Apparently Based on Foreknowledge of 9/11 Attacks, The London Times, 18 September 2001, http://911research.wtc7.net/cache/sept11/londontimes_insidertrading.html

[7] David Brancaccio, Marketplace Public Radio: News Archives, 17 October 2001, http://marketplace.publicradio.org/shows/2001/10/17_mpp.html

[8] Paul Thompson and The Center for Cooperative Research, Terror Timeline: Year by Year, Day by Day, Minute by Minute:  A Comprehensive Chronicle of the Road to 9/11 – and America’s Response, Harper Collins, 2004.  Also found at History Commons, Complete 9/11 TimelineInsider Trading and Other Foreknowledge http://www.historycommons.org/timeline.jsp?timeline=complete_911_timeline&before_9/11=insidertrading

[9] Associated Press, EU Searches for Suspicious Trading , 22 September 2001, http://www.foxnews.com/story/0,2933,34910,00.html

[10] World News Tonight, 20 September 2001

[11] Erin E. Arvedlund, Follow The Money: Terrorist Conspirators Could Have Profited More From Fall Of Entire Market Than Single Stocks, Barron’s (Dow Jones and Company), 6 October 2001

[12] Ibid

[13] Michael C. Ruppert, Crossing the Rubicon: the decline of the American empire at the end of the age of oil, New Society Publishers, 2004

[14] Kyle F. Hence, Massive pre-attack ‘insider trading’ offer authorities hottest trail to accomplices, Centre for Research on Globalisation (CRG), 21 April 2002, http://globalresearch.ca/articles/HEN204B.html

[15] Grant Ringshaw, Profits of doom, The London Telegraph, 23 September 2001, http://911research.wtc7.net/cache/sept11/telegraph_profitsofdoom.html

[16] Christian Berthelsen and Scott Winokur,  Suspicious profits sit uncollected:  Airline investors seem to be lying low, San Francisco Chronicle, 29 September 2001, http://www.sfgate.com/cgi-bin/article.cgi?file=%2Fchronicle%2Farchive%2F2001%2F09%2F29%2FMN186128.DTL#ixzz14XPGwh6e

[17] Lewis Paul Bremer III on Washington, DC, NBC4 TV, 11 September 2001, Vehmgericht http://vehme.blogspot.com/2007/08/lewis-paul-bremer-iii-on-washington-dc.html

[18] Charles Gasparino and Gregory Zuckerman, Treasury Bonds Enter Purview of U.S. Inquiry Into Attack Gains, The Wall Street Journal, 2 October 2001,http://s3.amazonaws.com/911timeline/2001/wallstreetjournal100201.html

[19] Christian Berthelsen and Scott Winokur

[20] Tagesspiegel, Former German Cabinet Minister Attacks Official Brainwashing On September 11 Issue Points at “Mad Dog” Zbig and Huntington, 13 January 2002,http://www.ratical.org/ratville/CAH/VonBuelow.html

[21] 9/11 Commission memorandum

[22] The 9/11 Commission memorandum that summarized the FBI investigations refers to the traders involved in the Stratesec purchase.  From the references in the document, we can make out that the two people had the same last name and were related.  This fits the description of Wirt and Sally Walker, who are known to be stock holders in Stratesec.  Additionally, one (Wirt) was a director at the company, a director at a publicly traded company in Oklahoma (Aviation General), and chairman of an investment firm in Washington, DC (Kuwam Corp).

[23] 9/11 Commission memorandum

[24] Sourcewatch, Mansoor Ijaz/Sudanhttp://www.sourcewatch.org/index.php?title=Mansoor_Ijaz/Sudan

[25] History Commons, Complete 911 Timeline, Bin Laden Familyhttp://www.historycommons.org/timeline.jsp?financing_of_al-qaeda:_a_more_detailed_look=binladenFamily&timeline=complete_911_timeline

[26] Kevin R. Ryan, The History of Wirt Dexter Walker: Russell & Co, the CIA and 9/11911blogger.com, 3 September 2010, http://911blogger.com/news/2010-09-03/history-wirt-dexter-walker-russell-company-cia-and-911

[27] Michael Moran, Bin Laden comes home to roost : His CIA ties are only the beginning of a woeful story, MSNBC, 24 August 1998, http://www.msnbc.msn.com/id/3340101

[28] Alex Berenson, U.S. Suggests, Without Proof, Stock Adviser Knew of 9/11, The New York Times, 25 May 2002, http://query.nytimes.com/gst/fullpage.html?res=9E06E4DB143BF936A15756C0A9649C8B63

[29] Alex Berenson, Five, Including F.B.I. Agents, Are Named In a Conspiracy, The New York Times, 23 May 2002

[30] History Commons, Complete 911 Timeline, Saudi American Bank, http://www.historycommons.org/entity.jsp?entity=saudi_american_bank

[31] 9/11 Commission memorandum

[32] 9/11 Commission memorandum

[33] Erik Kirschbaum, German Firm Probes Final World Trade Center Deals, Reuters, 16 December 2001, http://911research.wtc7.net/cache/sept11/reuters_wtc_drives.html

[34] Allen M. Poteshman, Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001, The Journal of Business, 2006, vol. 79, no. 4,http://www.journals.uchicago.edu/doi/abs/10.1086/503645

[35] Marc Chesney, et al, Detecting Informed Trading Activities in the Options Markets, Social Sciences Research Network, 13 January 2010, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1522157

[36] Wing-Keung Wong, et al, Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?, Social Sciences Research Network, April 2010,http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1588523

Kevin R. Ryan began to investigate the tragedy of September 11th, 2001 through his work as Site Manager for a division of Underwriters Laboratories (UL). He was fired by UL in 2004 for writing to the National Institute of Standards and Technology (NIST), asking about its World Trade Center investigation and UL’s work to ensure the fire resistance of the buildings. He now serves as co-editor of the Journal of 9/11 Studies, and board director at Architects and Engineers for 9/11 Truth. Ryan has co-authored several books and peer-reviewed scientific articles on the subject. Read more articles by Kevin Ryan.

Why was the cashing out of billions of dollars just before the 9/11 attacks never investigated?

Follow the Money? God forbid.

Why was the cashing out of billions of dollars just before the 9/11 attacks never investigated?

by Jim Hogue
http://baltimorechronicle.com/2008/012908Hogue.shtml
Baltimore Chronicle, 29 January 2008

Had an investigation been done into the crime of failing to file the “currency transaction reports? in August 2001, then we would know who made the cash withdrawals in $100 bills amounting to the $5 billion surge.
It's been over six years since 9/11, but U.S. regulatory entities have been slow to follow through with reports about the complex financial transactions that occurred just prior to and following the attacks. Such research could shed light on such questions as who was behind them – and who benefited – and could help lay to rest the rumors that have been festering.

Warning bells about anomalies in the fiscal sector were sounded in the summer of 2001, but not heeded. Among those who has since raised questions was Bill Bergman. As a financial market analyst for the Federal Reserve, he was assigned in 2003 to review the record of July and August of 2001. He noticed an unusual surge in the currency component of the M1 money supply (cash circulating outside of banks) during that period. The surge totaled over $5 billion above the norm for a two-month increase. The increase in August alone was the third largest single monthly increase since 1947, even after a significantly above-average month in July.

When reviewing the record of July and August of 2001, Bill Bergman noticed a $5 billion surge in the currency component of the M1 money supply?the third largest such increase since 1947. Bergman asked about this anomaly?and was removed from his investigative duties.
Surges in the currency component of M1 are often the result of people withdrawing their cash to protect themselves lest some anticipated disaster (such as Y2K) befall the economy. In January of 1991 a surge was recorded (the then second-largest since ?47), which could be attributed to “war-time hoarding? before the Iraq I invasion, but could also be attributed to financial maneuverings and liquefying of assets relating to the BCCI enforcement proceedings.

Bergman points out that the August 2001 withdrawals may have been, to a large extent, caused by the Argentinian banking crisis that was occurring at the time. However, he raises the point that no explanation has yet fully answered the important question: Why was the cashing out of billions of dollars just before the 9/11 attacks never investigated? It’s possible that the answer to this question is also the answer to the other follow-the-money questions surrounding 9/11; and despite an embarrassing heap of evidence, neither the press, nor Congress, nor any agency with investigative responsibility has done its job on our behalf. On the contrary, their inaction might reasonably be construed as a cover-up.

Bergman "followed the money," including developing a framework for working with money-laundering data and “suspicious activity? reports for monitoring and investigating terrorism. The questions he asked about what happened during the summer of 2001 should have led to investigations, which should have resulted in the prosecution of those with foreknowledge of the attacks.

Those who follow the history of the 9/11 fact-finding movement know that there is a laundry-list of unanswered questions that are just as compelling as those put forth by Bergman. And there is also a laundry-list of whistle-blowers who have been fired and subsequently ignored. So it is not at all surprising that Bergman was removed from his investigative duties, and that his concerns were not publicly addressed.

Bergman's supervisor instructed him follow up on an unanswered question he had raised pertaining to an August 2, 2001 letter from the Board of Governors of the Federal Reserve to the 12 Reserve Banks. This letter urged scrutiny of suspicious activity reports. Bergman learned of the pervasiveness of the warnings of the 9/11 attacks, and wondered how thoroughly these warnings had permeated the financial system.

In this capacity as Federal Reserve investigative point-man, and with his money-laundering portfolio being guided by his supervisor's directive, he asked the Board why they had issued their August 2, 2001 directive, and whether this related to any heightened intelligence of a terrorist threat. His position was then eliminated, and a crucial investigation was terminated before it could even begin.
Another 9/11 Commission Misrepresentation

Footnote 28 of the Staff Monograph on Terrorist Financing from the official 9/11 Commission Report states that the National Money-laundering Strategy Report for 2001 “didn’t mention terrorist financing in any of its 50 pages.”

True? No. The NMLS Report mentions it 17 times. One gets the impression that the commission staff (under Philip Zelikow) was trying to paint the picture that there wasn’t a lot of co-operation between those involved in counterterrorism and the banking regulators in 2001. Why do they paint this picture, inasmuch as the contrary is the case? In fact, anti-terrorism was an important element of the National Money Strategy, and it was included and emphasized in its Report annually. It may have been part of the reason why the August 2, 2001 letter urging scrutiny of suspicious activity reports was issued in the first place.

In turn, the billions in currency shipments of July and August 2001 are completely omitted in the 9/11 Commission Report. I make bold to point out that the official story-line is that the attacks were accomplished by "the evil-doers" on a shoe-string budget with little money changing hands. Therefore, according to Zelikow et al., it is pointless to look at large flows of money in an investigation of the attacks. That makes perfect sense – unless you happen to have a brain.

To state the obvious, there are two reasons why Zelikow et al. made the false statement regarding there having been no references to terrorism in the National Money-laundering Strategy Report. One reason could be to justify and encourage more scrutiny (legal or otherwise) of small transactions generally, e.g. via USAPA, and the other could be to establish (read: invent) a reason for missing the evidence pertaining to the attacks. ('Transactions too small. No one could find.') And since the real money trail points to foreknowledge within the financial community at large, and, possibly, the Federal Reserve specifically, the "low-budget terrorism" story-line that the 9/11 Commission had established needed to be protected.

If such a lack of attentiveness to a financial transaction of $5 billion goes unnoticed in August 2001, then a reason had to be established for this lack of attention. And Bergman’s attentiveness to the Board of Governor’s August 2 letter was the fly in the ointment, as this letter proves that the Board was indeed attentive to suspicious transactions, even very, very large ones. Bergman’s question of “Why? is therefore key to yet another avenue of inquiry.
All the News that’s Permissible to Print

Note that a few dollars sent to an Islamic charity could warrant arrests, investigations, front-page stories, and, sometimes, torture and many years in jail. That's Propaganda 101: 'Large amounts of money do not fund major acts of terrorism. Small amounts do. Small amounts covered the 9/11 tab, therefore large amounts didn’t.' The news coverage, creating high-profile prosecutions for relatively small transactions, reinforces this scenario.

With this in mind, we suggest that the reader follow the story of Mark Siljander (major coverage) on the one hand, and also follow the Times UK reports from Sibel Edmonds (verboten in the US mainstream press) on the other hand. Edmonds told me recently of the major foreign media outlets that had offered to report her story. Not one major outlet did so in the US. R.T. Naylor suggests, in his wonderful book Satanic Purses, that any major terrorist event that involves a lot of money is 'state terrorism,' and this is independently confirmed by Sibel Edmonds? statements as to the enormous sums changing hands at the time of the 9/11 attacks. I suggest that her testimony to the Senate Intelligence Committee (Leahy and Grassley) gave the lie to the official financial myth of 9/11. If Bergman had been allowed to continue his investigation, I suggest that he would have uncovered the same thing. Note that the drug money and other illicit transactions described by Edmonds occurred during the same time period, and the amounts in the billions are comparable.
The Law

To members of the constabulary: the operable statutes are 1) The 1970 Bank Secrecy Act that imposed new financial reporting requirements to facilitate the tracing of questionable transactions and 2) the 1986 Money Laundering Control Act that criminalized the act of money-laundering. Also operable, and of particular relevance in a historical context, is the 1917 Trading With the Enemy Act that was relied upon in October of 1942 to seize the assets of “Hitler’s Bankers in America,” Union Banking, (involving bank vice president Prescott Bush under his father-in-law and bank president, George Walker).

The law is not always followed, and the required “currency transaction reports? are sometimes not filed. The 9/11 Commission Report and the National Money-laundering Strategy Report for 2001 did not identify those who are involved with large cash transactions. Had the paperwork been done in August of 2001, or an investigation done into the crime of failing to file the “currency transaction reports,” then we would know who made the cash withdrawals in $100 bills amounting to the $5 billion surge.

Information about what transpired took years to develop after the fact. For example, the Federal Reserve fined United Bank of Switzerland and Riggs Bank in 2004.

Mr. Bergman states that he doesn’t want to be a dog barking up the wrong tree, but the authorities, apparently under orders from our top officials, are preventing a standard investigation and the most obvious prosecutorial methodology from going forth.

Congress could step in; a prosecutor could step up. But don’t hold your breath.

Jim Hogue, a former teacher, is now an actor who tours his performance of Ethan Allen. He also operates a small farm in Calais, VT. His seminal articles about Sibel Edmonds and CIA Whistleblower “Miss Moneypenny? may be found in this newspaper's archives.

Bill Bergman currently works in Chicago as an equity analyst for a private sector firm. From 1998 to 2004 he was a senior financial market analyst for the Federal Reserve Bank of Chicago, where his areas of expertise included Insolvency Issues in Derivatives Markets, Money Laundering, and Ethics and Payment System Policy. He holds an M.B.A. in Finance and an M.A. in Public Policy from the University of Chicago.

Large number of “put” options are placed on American Airlines stock

September 10, 2001 – Large number of "put" options are placed on American Airlines stock betting that the stock price would fall.

"An extraordinary number of trades were betting that American Airlines stock price would fall.
The trades are called "puts" and they involved at least 450,000 shares of American. But what raised the red flag is more than 80 percent of the orders were "puts", far outnumbering "call" options, those betting the stock would rise.
Sources tell 60 Minutes that the initial options were bought through at least two brokerage firms including NFS, a subsidiary of Fidelity Brokerage, and TD Waterhouse, a discount firm.
TD Waterhouse says they handled approximately 3 percent of the initial orders for "puts" on American Airline stock. The company says it has looked at the orders and has determined no evidence of any suspicious activity.
The same thing happened with United Airlines on the Chicago Board Options Exchange four days before the attack. An extremely unbalanced number of trades betting United’s stock price would fall ? also transformed into huge profits when it did after the hijackings." – CBS (09/19/01)

"There was an unusually large jump in purchases of put options on the stocks of UAL Corp. and AMR Corp. in the three business days before the attack on major options exchanges in the United States. On one day, UAL put option purchases were 25 times greater than the year-to-date average. In the month before the attacks, short sales jumped by 40 percent for UAL and 20 percent for American.
Other financial professionals have told The Chronicle that an estimated $5 million to $10 million in all could have been made on the trades, including trading on other days and purchases of options on the parent company of American, AMR Corp. Four United and American aircraft crashed in the attacks.
The money was made on Sept. 6, 7 and 10 in transactions involving United, American, Morgan Stanley Dean Witter & Co. and Merrill Lynch & Co., the center said. Morgan Stanley occupied 22 floors of the World Trade Center; Merrill Lynch’s headquarters offices were nearby.
The source familiar with the United trades identified Deutsche Banc Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of the options. Rohini Pragasam, a bank spokeswoman, declined comment." – San Francisco Chronicle (09/29/01)

"Securities regulators around the world are investigating whether the terrorists involved in last week’s attack profited in financial markets, possibly by buying options on the stock of United Airlines, Boeing, American Airlines and other companies in the knowledge that prices would fall.
The day before the attacks, put volume on American Airlines stock was 4,516, nearly 11 times its average daily volume for the year." – Chicago Tribune (09/19/01)

– More news articles on 9/11 insider trading at:  9/11 Truth.org’s Reading Room

Unanswered Questions about the Put-options and 9/11

Unanswered Questions about the Put-options and 9/11
By Ambrosia Pardue

It was widely reported immediately after 9/11 that insider trading occurred in which trading skyrocketed on put-options that bet on a drop in UAL Corp. and AMR Corp. (parent company to American Airlines) stock in the days before the attacks. According to Bloomberg data, Morgan Stanley Dean Witter & Co. and Merrill Lynch & Co. also experienced pre-attack trading twelve, to more than twenty-five times the usual volume of put-options. Morgan Stanley put-options jumped to 2,157 contracts between September 6 and September 10?almost twenty-seven times a previous daily average of twenty-seven contracts. Merrill Lynch’s daily activities previous to September 11th were 252. 12,215 contracts were traded from September 5 to September 10th. Citigroup Inc. had a jump in trading of about 45 percent. One day before the American Airlines planes were hijacked and crashed, 1,535 contracts were traded on options that let investors profit from the American Airlines stock falls. 1 All companies were linked to the hijacked airplanes or to the World Trade Center. Morgan Stanley occupied twenty-two stories of the WTC and Merrill Lynch had offices nearby.2 Christian Berthelsen and Scott Winokur of The San Francisco Chronicle wrote on September 29, 2001 that as of that date investors had yet to collect more than $2.5 million in profits made in these put stock options of United Airlines, and “the uncollected money raises suspicions that the investors?whose identities and nationalities have not been made public – had advanced knowledge of the strikes.”3

A put option is a contract that gives the holder the right to sell a specified number of shares in a particular stock, usually at a predetermined price, called the strike price, on or before the option’s expiration date – these are the stock index or dollar face value of bonds. The buyer (holder) pays the seller (writer) a premium and the buyer profits from the contract if the stock price drops. If the buyer decides to exercise the option, as opposed to selling it, the seller must buy the security. The seller profits when the underlying securitx’s price remains the same, rises or drops by less than the premium received.4 A short sale is where an investor borrows stock from a broker and sells it, hoping to buy it back at a lower price.5 A put option bets that a stock will fall, and a call option bets that stock will rise; there were far more put options than call options in the days proceeding September 11th.6 Cooperative Research states that “assuming 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.”

Of interesting note is that the firm that handled the purchase of many of the put options on United Airlines, the Bank of Alex Brown, was headed by “Buzzy? Krongard until 1998. Krongard was the deputy director of the CIA during G.W.Bush’s first four years. Tom Flocco reported on July 16, 2002 that European reporters found most of the suspicious pre-September 11th trading “passed through Deutsche bank and Alex Brown investment division by means of a procedure called portage, which assures the anonymity of individuals making the transactions.”7

Cooperative Research reported that the Securities and Exchange Commission published a list that included some thirty-eight companies whose stocks may have been traded prior to September 11th by people who had “advanced knowledge” of the attacks. From the Wilderness reported that the CIA, the Israeli Mossad, and many other intelligence agencies monitor stock trading in real time using highly advanced programs. Stock trading irregularities could be used to alert national intelligence services of possible terrorist attacks.

CIA spokesman Tom Crispell denied that the CIA was monitoring U.S. equity markets trading activity prior to September 11th. Tom Flocco has found growing evidence that the FBI and other government intelligence agencies were more closely linked to the pre-September 11th insider trading.8 The San Diego Union-Tribune January 5, 2005 article stated that “a former FBI agent admitted that he gave online stock traders confidential details of federal investigations, including a probe of the Sept. 11 terror attacks.”9

The New York Times, on September 28, 2001, reported that the “short positions and volume of put options rose sharply across the travel industry” which has been cited repeatedly in news reports as possible evidence of illegal trading.” The London Telegraph quoted Ernst Weltek, president of Bundesbank, on September 23, 2001 as saying that “there are ever clearer signs that there were activities on international financial markets that must have been carried out with the necessary expert knowledge.”10 Dylan Ratigan of Bloomberg Business News said that “this could very well be insider trading at the worst, more 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.”11 CBSNews.com quoted McLucas, former Securities and Exchange Commission Enforcement Director, as saying that “the options trading in particular suggests to me that somebody, somewhere, may have had an inkling that something bad was going to happen to certainly those airlines stocks.”12

The 9/11 Commission report scantly covers the stock options issue. On page 499, footnote #130, the 9/11 Commission reports that, "some unusual trading did in fact occur, but such trade proved to have an innocuous explanation”.A single U.S. based institutional investor with no conceivable ties to al Qaeda purchased 95% of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10." This explanation only addresses the UAL and American put-options, ignores trades in other companies, and fails to identify the purchaser, thereby leaving even more unanswered questions.

This issue cannot be discounted, overlooked, or debunked as a conspiracy theory. The questions remain: who put in the calls for these options, and are the calls tied to Krongard, the CIA, the alleged terrorists, or others?

End Notes:
1 www.themodernreligion.com/terror/wtc-unusualtrading.html
2 www.themodernreligion.com/terror/wtc-unusualtrading.html
3 www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/29/MN186128
4 www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/29/MN186128
5 http://66.159.17.51/cooperativeresearch/www/wot/sept11/suspicioustradingact.html
6 www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/29/MN186128
7 www.cbsnews.com/stories/2001/09/19/eveningnews/printable311834.shtml
8 scoop.co.nz/stories/HL0207/S00119.htm
9 scoop.co.nz/stories/HL0207/S00119.htm
10 www.signonsandiego.com/uniontrib/20050105/news_1b5elgindy.html.
11 http://www.portal.telegraph.co.uk/news/main/jhtml?xml=/news/2001/09/23/widen23.xml
12 http://fromthewilderness.com/free/ww3/051602_liewontstand.html
13 www.cbs.news.com/stories/2001/09/26/archive/printable 312663.shtml

Massive pre-attack ‘insider trading’ offer authorities hottest trail to accomplices

 Massive pre-attack ‘insider trading’ offer authorities hottest trail to accomplices

by Kyle F. Hence

 
Centre for Research on Globalisation (CRG),  globalresearch.ca , 21 April 2002


CRG’s Global Outlook, premiere issue on  "Stop the War" provides detailed documentation on the war and September 11 Order/subscribe. Consult Table of Contents

Part II — Billions in Pre-911 Insider Trading Profits Leaves a Hot Trail: How Bush Administration Naysayers May Have Let it go Cold

Part I of Making a Killing provided a glimpse of a shadowy, legitimized global financial network that is employed by criminals of all kinds to carry out or manage the profits from all manner of nefarious activity. It documented how the Bush Administration in 2001 undermined, stalled and withdrew from a global effort to clamp down on money laundering. We learned the indirect connection Enron had to intense lobbying efforts which ultimately swayed the Administration. And how following the attacks of 9-11, Bush changed his tune and working with allies in the war on terrorism, seized over $100 million linked to Al Qeada and other terrorist groups. Unfortunately, this is likely the tip of the iceberg of drug and terror money that is managed by the highest echelons of double-breasted gucci suited criminals.

In Part II, we will examine closely what is likely the largest, most globalized and heinous case of insider trading in economic history and how it offered authorities a hot money trail to follow. If successful in tracking the perpetrators, authorities would not only be successful in implicating obvious accomplices in the 9-11 attacks, but also would be able to strike deeply into the infrastructure of a shadow financial network and hundreds of billions of dollars that flow through it.


As of mid-March, authorities say they have frozen over $100 million in terrorist assets. But how to strike deeper to prevent future attacks? Some believe the answer lies at the end of the paper trail that investigators are following from huge insider trading placed on carefully selected stocks in the days leading up to 9-11.

According to Phil Erlanger, a former Senior Technical Analyst with Fidelity , and founder of a Florida firm that tracks short selling and options trading, insiders made off with billions (not mere millions) in profits by betting on the fall of stocks they knew would tumble in the aftermath of the WTC and Pentagon attacks. [http://www.erlangersqueezeplay.com ] Andreas von Bulow, a former member of the German Parliament, once responsible for the oversight of the German secret services, estimated that profits by insider traders were $15 billion. CBS offered a far more conservative figure when it reported (Sept 26) that "at least seven countries are dissecting suspicious trades that may have netted more than $100 million in profits."

Regardless of estimates, to Dylan Ratigan of Bloomberg Business News, the evidence was compelling; "This is the worst case of insider trading ever." [Good Morning Texas, Sept. 20, 2001] The sheer scope, size and the uncanny timing of 9-11 insider trading demanded an aggressive investigation. But the stakes involved, with nearly 3000 dead, have never been higher for financial crimes investigators.

Suspicious trading was first identified by Japanese authorities. But soon concerns were raised and a pattern could be discerned in countries around the world including Singapore, Hong Kong, Italy, France, Switzerland, the Netherlands, Great Britain, Germany and Canada. Jonathan Winer, an ABC News Consultant said "it’s absolutely unprecedented to see cases of insider trading covering the entire world from Japan to the US to North America to Europe." [World News Tonight, Sept. 20, 2001] Investigators were soon hot on the trail on a matter of obvious national security to many nations.

Bloomberg News reported that Former chief of Enforcement at the SEC; William McLucas said regulators will "certainly be able to track down every trade, where the trade cleared, where the trade was directed from." However, Treasury Secretary O’Neill downplayed hopes for a successful investigation by pointing out the challenge of penetrating veils of secrecy before a name can be attached to a suspicious trade; "You’ve got to go through ten veils before you get to the real source." [AP; September 20, testimony before Senate Banking Committee] . Talk about lowering the bar of expectations; very unsettling coming from someone who could help bring to justice those guilty of the worst terrorist attack history–the massacre of thousands.

In the months since these comments, tightlipped authorities have revealed few details. Any questions put to those prosecuting the war on terrorist funding cannot be answered. The familiar refrain is heard; "our investigation is ongoing." Though widely reported in September and October of last year, months have elapsed since the insider trading received attention. The unresolved crime of 9-11 insider trading is a dark cloud that hangs over this administration and its prosecution of the ‘war on terrorism.’ What is worse is that those who profited remain free to use those profits of death to finance their next attack.

For those who dismiss the whole phenomena, here’s what we do know thus far from reports from major newspapers and television news outlets around the globe. Taken separately any of the following details or comments is notable, but taken together and placed in context, the evidence of unprecedented profiteering by terrorists and/or those with prior knowledge is clearly undeniable.

Massive Put Options spikes and ‘Naked’ calls Bloomberg News reported that put options in UAL Corp (parent for United Airlines) surged 285 times the average volume and 75 times the total number of put options traded up until that time. This was the largest reported spike. In another observation of the same phenomena reported in the September 22nd Herald Sun, UAL put options contracts soared 90 times in one day over total from the previous three weeks. That’s 90x not 90%. On September 10, put option contracts on AMR (parent for American Airlines) spiked 60 times the daily average and five times the total of all $30 put options traded before September 10. ["Pre-attack trading probed: Regulators in U.S., Europe and Asia check put options"; Judy Mathewson and Michael Nol, September 19]

"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, principal of Broadband Research quoted in The San Francisco Chronicle.

Bloomberg.com and Erlangersqeezeplay.com published reports identifying a clear pattern of highly unusual, and in some cases, massive spikes in put options in stocks that would have been deemed by those with detailed prior knowledge most likely hardest hit in the market aftermath of a WTC attack. These were primarily airline (UAL and AMR, notably not Delta), insurance, brokerage and hotel stocks. Phil Erlanger also noted a pattern of significant spikes in ‘naked calls’ in the same stocks. Naked calls are a high-risk form of short selling not backed up by stock position in the company at issue.

Thirty-eight companies were placed on a SEC list and circulated amongst brokerages that placed the put options on behalf of clients. These included among many others, TD Waterhouse, NFS (subsidiary of Fidelity of Boston), Alex Brown/Deutsche Bank, Goldman Sachs, and Lehman Brothers. [The San Francisco Chronicle; AP]. In the January 2002 Congressional record, an informal survey conducted by Levin-Grassley staffs, revealed that 10 of 22 responding securities and brokerage firms, managed accounts for 45,000 offshore clients.

Below are a few standouts on the SEC list [‘ *’ indicates a WTC tenant; (-x) represents the multiple over average volume]: Airlines: UAL (285x), AMR (60x) Insurance sector: Marsh & McLennan (93x)*, Citigroup (45x), Swiss Re, XL Capital Brokers: Bear Stearns (60x), Morgan Stanley (27x)*, Merrill Lynch (12x)

Not included on the SEC list, but featured on the Erlangersqeezeplay.com report, were hotel chains Marriott, Hilton and Starwood Hotels. Most anomalous were the huge put option trading spikes placed in only two of the three major US airlines. Almost always, if investors believe the airline industry is due to drop, they will short all three major carriers. This was not the case here because Delta did not see spikes similar to UAL and AMR.

Analysts also noted that though the insurance sector was one of the strongest in a depressed stock market, there were huge spikes in put options in Marsh & McLennan and in Citigroup. Marsh & McLennan, the biggest insurance broker, was a World Trade Center tenant with 1,700 employees. It also saw, next to UAL, the highest spike in put options; thus you have a confluence of facts that, in the minds of many experienced traders and experts, amounts to unequivocal evidence of foul play. Clearly traders placed bets based on sure-fire insider prior knowledge. The odds against this happening randomly or coincidentally are astronomical; probably incalculable.

The put options, though they received the bulk of news coverage, were reportedly only one of several instruments used by the insiders. Suspicious trading in 5-year bonds and in oil and gold futures was also noted, and presumably investigated.

Oil and gold futures The Associated Press reported on September 22nd that a German Central Bank study strongly points to "terrorism insider trading" not only in airline and insurance companies but also in gold and oil futures. These he said, "could not be chalked up to coincidence." Bundesbank President, Ernst Welteke, said that though it would be "extremely difficult to really verify" but he believed "in one or the other case it will be possible to pinpoint the source."

Unusual high volume in pre-attack 5 year bond trading The Wall Street Journal reported on October 2 that the Secret Service had begun a probe into an unusually high volume of five-year US Treasury note purchases made prior to the attacks. The Treasury note transactions included a single $5 billion trade. The Journal noted that "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 after the events of September 11.

‘Last hours’ surge of financial activity at WTC According to a Reuters report of December 16, German data retrieval experts, hired by WTC tenant firms, were mining data off damaged hard disks recovered from the ground zero. The goal is to discover who was responsible for the movement of unusually large sums of money through the computers of the WTC in the hours before the attack. Peter Henschel, director of Convar, the firm responsible, said, "not only the volume, but the size of the transactions was far higher than usual for a day like that." Richard Wagner, a data retrieval expert estimated that more than $100 million in illegal transactions appeared to have rushed through the WTC computers before and during the disaster.

The evidence and comments offered by traders, analysts, bankers and others in the immediate aftermath indicates there was, in fact, a carefully planned and sophisticated effort of massive profiteering from the precipitous fall of stocks that occurred when trading opened following the attack. This is expert documentation and observations based on years of experience. The implications are absolutely frightening. And all the more reason for authorities to pull out all the stops to identify and prosecute those responsible and shut down the global financial network facilitated the most heinous of crimes. Unfortunately, that’s not exactly what’s happened.

‘Naysayers’ raise suspicions; Enron diverts attention from dire National security issue Months have passed since the launch of investigations by the SEC, NYSE, CBOE (Chicago Board of Options Exchange), Department of Justice, FBI, Secret Service, CIA, Department of Treasury, and the NSA. And yet there is no news, no suspects, no prosecutions, nothing. There are fears now that early ‘naysayers’ may have let a hot trail to go cold and allowed the terrorist insiders to cover their tracks. Despite all the evidence to the contrary, the FBI’s Dennis Lormel said on October 3, 2001 before Congress that there were "no flags or indicators" referring to mere "rumors" about the pre-attack insider trading.

The Enron scandal, beginning in October, followed on the heels of the 9-11 attack and subsequent investigations into Enron began to divide and stretch the limited resources of the agencies and regulators involved. The media focus began to shift as well with six or eight Congressional committees holding hearings and providing all sorts of media drama. Congress began to look toward remedies to stave off a total crisis of confidence in our economic system, and justifiably so. Obviously, the largest bankruptcy in US history, affecting thousands of employees with 401k plans and millions of pensioners, merits serious attention. Ironically, it may lead them to crack down on the same infrastructure; employed by Enron’s Andrew Fastow and terrorist alike.

However, a case could be made that the focus on Enron has diverted attention away from a matter of far greater national security. The insiders, possibly the masterminds behind the suicide attacks, have walked away with huge profits for their sophisticated pre-attack trading; estimated by some to be in the billions of dollars. More to the point, they are now planning and financing their next attack with these 9-11 takings, as yet unmolested by a genuinely aggressive U.S. effort to shut them down.

In light of the weighty and compelling evidence, Lormel’s insistence there were "no flags or indicators" of possible terrorist insider trading, is blatantly wrong or worse, suspect. Most of the information above, including Bloomberg trading charts documenting massive put options spikes, was in the public domain prior to his testimony. Yet, Lormel claimed there was no indication of suspicious trading. Why then were investigations launched by over a dozen nations and 8 or 9 U.S. government agencies, exchanges and commissions? How does one account for supporting comments of the traders and analysts with years of hands-on experience in the markets?

Lormel’s testimony, coming from an official charged with tracking down, and starving terrorists of funding to protect Americans does little to inspire confidence; especially in the wake of the worst intelligence failure in US history. On the contrary, such remarks only raise very uncomfortable suspicions and legitimate concern that the forces behind walls of financial secrecy are so powerful as to thwart or intimidate the highest echelon of those responsible for executing our nation’s war on terrorism. Or on drug trafficking. Or on Enronomic tax evasion and corporate fraud for that matter.

The obvious challenge for authorities is to put these suspicions to rest and follow the money trail to those complicit in the attacks. To do so, requires investigators to break through the veils of bank secrecy in offshore tax havens that may protect terrorists and Enron profiteers alike. Unfortunately, thanks to the Bush Administrations withdrawal from last year’s FATF efforts, investigators may be having difficulty in doing so. And once again, the trail may have gone cold. And yet it is not unreasonable to expect that given such a matter of national security, Congress and the authorities would pull out ALL the stops. They would act quickly to force financial entities to divulge the names of those who placed the trades in question.

Surely, ‘the most powerful nation in the world’ can apply enough pressure on non-cooperating financial jurisdictions to force them to reveal the identities of terrorists who could attack again at any moment. The reality of the threat of more attacks precludes the use of past excuses and inaction. The Cayman Islands, Nauru, indeed most offshore havens lack standing armies. While it may be perhaps ‘the hardest of nuts to crack,’ the urgency and justification demands we do whatever is necessary to do so, at little risk to our nation’s armed forces.

A real war on terrorism would lead to seizures of billions not millions. Nothing close to this level has yet occurred and the investigation has yielded little in five months. According to a statement by Representative LaFalce on the Congressional Record, the Treasury Department, as of late January had failed to exercise, even once, their new powers to pressure non-cooperating overseas and offshore financial facilities. Investigators into pre-attack trading have not implicated a single insider, terrorist or otherwise. UN efforts are creeping along ineffectively with many nations failing to fully cooperate or not cooperate at all, as divulged to the press by American UN Ambassador Negroponte at a February event aired on C-SPAN. There is a distressing and suspicious pattern here. The administration’s will to pursue this matter is sorely lacking.

Another case in point: In December of 2000, the U.S. and Russia co-sponsored a UN Security Council resolution to freeze monies linked to designated terrorists. The list included five alleged close associates of Bin Laden–Amin al-Haq, Saqar al-Jadawi, Ahmad Sa’id Al-Kadr, Sa’d A-Sharif and Bilal bin Marwan. Inexplicably the U.S. Treasury did not officially place these five on the U.S. blacklist until October 12, 2001. Why the delay of ten months and who is responsible for it? Naturally, this case raises further suspicion, as it rightly should, regarding the intent and integrity of those charged with protecting our national interests and security.


Copyright

Suppressed Details of Criminal Insider Trading

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 United Airline Stock

by Michael Ruppert

  

FTW – October 9, 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. 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” that 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.   by Michael C. Ruppert 

 

 

 

 

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 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” and “put options”.    

 

“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,” are contracts giving the buyer the option to sell stocks at a later date. Purchased at nominal prices of, for example, $1.00 per share, they 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 Stanlex’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., with headquarters near the Twin Towers, 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 Germanx’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”? This was the operation managed by Krongard until as recently as 1998.   

 

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, which also 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 of 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 http://www.copvcia.com/stories/part_2.html.    

 

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.

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