Researchers from New York University and Columbia University have found that certain traders may have had advanced knowledge of the impending terrorist attack by Hamas on October 7th, and profited from it. The Israeli authorities are taking these reports seriously and are conducting investigations into the matter.
The study found that short selling activity in the ETF MSCI Israel, which tracks stocks listed on the Tel Aviv Stock Exchange, surged five days before the attack. This suggests that some traders may have been aware of the attack in advance. Short sellers profit from falling prices by borrowing shares, selling them at a high price, and then buying them back at a lower price after the price has dropped. This type of speculation was particularly active in Israeli companies such as Checkpoint, Nice, Teva, and Bank Leumi which are listed on the TASE.
The heightened short selling activity in Israeli stocks prior to the attack raises suspicions about insider trading or advanced knowledge of the events. The researchers note that similar suspicious trading activity had been observed during previous events involving security crises in Israel.
If investigations reveal a direct link between the short sellers and Hamas, it could have serious legal and regulatory implications globally. The utilization of short selling techniques for funding by terrorist organizations like Hamas could lead to increased scrutiny by authorities and regulators. The researchers also highlight the financial savvy of organizations like Hamas and the potential use of crypto transactions for financing.
The researchers emphasize that further investigations are needed to determine the exact nature of the transactions and whether they were based on insider information. The profits made from short selling Israeli stocks in the wake of the attack suggest that some traders were able to benefit from
