[iwar] [fc:Were.Terrorists.Short-Selling?]

From: Fred Cohen (fc@all.net)
Date: 2001-09-17 22:25:36
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From: Fred Cohen <fc@all.net>
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Date: Mon, 17 Sep 2001 22:25:36 -0700 (PDT)
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      Copyright © 2001 The International Herald Tribune | www.iht.com

Were Terrorists Short-Selling? Regulators Look at Pre-Attack Stock
Trades William Drozdiak Washington Post Service Tuesday, September 18,
2001

BRUSSELS Stock market regulators in Europe and Japan said Monday they
were investigating whether groups connected with the U.S.  terror
bombings sought to reap windfall profits from the tragedy by dumping
shares of airlines and insurance companies in advance of the attacks. 

Financial authorities in Europe said their scrutiny of suspicious stock
sales before the attacks last Tuesday were part of a broader inquiry
into the global financial dealings of Osama bin Laden, the Islamic
radical regarded as the likely mastermind of the assaults. 

Mr.  bin Laden, the scion of a Saudi construction magnate, is estimated
to be worth more than $300 million.  He is known to have developed an
elaborate financial network, including companies in Cyprus, Tunisia and
Switzerland, that help launder earnings and donations from supporters
scattered throughout the Gulf, North Africa and Muslim communities in
Europe. 

Swiss prosecutors are focusing their attention on an investment bank in
Lugano called Al Taqwa, which means "fear of God" in Arabic.  The police
suspect the bank may have handled important transactions for Mr.  bin
Laden in the past, but they have not been able to find conclusive proof
of links to terrorist plots. 

Ahmed Huber, a member of Al Taqwa's board of directors, acknowledges
dealings with Mr.  bin Laden's associates.  But he rejected any
involvement in terror activities, saying the bank's main role was to
help finance education and agriculture projects in the Third World. 

As the United States ponders various kinds of military retaliation for
the attacks, U.S.  and European officials said a major international
campaign was also being mobilized on several continents to dismantle Mr. 
bin Laden's labyrinthine financial arrangements. 

Investigators have been struck by how several of the hijacking suspects
apparently had access to large sums of cash that were used to finance
first-class travel, comfortable apartments, and expensive pilot school
training over several years. 

Much of Mr.  bin Laden's wealth is thought to have stemmed from his
family, which disowned him after he was expelled from Saudi Arabia. 
U.S.  and European intelligence sources say a considerable part of his
organization's wealth may also have been accumulated through shrewd
investments on European stock markets. 

The Italian government is looking into reports that Mr.  bin Laden
channeled funds through brokerage houses in Milan to speculate on
international financial markets.  Defense minister Antonio Martino, a
former professor of finance at Rome's most prestigious private
university, said he was convinced that terrorist states and groups,
including those with connections to Mr.  bin Laden, have been actively
trading on global markets. 

"I am convinced that the person who organized the attacks in New York,"
Mr.  Martino said in an interview with the Italian daily La Stampa, "has
a lucid mind and knows very well that money gives power."

European regulators are studying the stock movements of three large
reinsurance companies in Germany, France and Switzerland to see if their
sharp drops in value may have been related to block trading in the four
days preceding the attacks.  Reinsurance companies provide coverage for
losses by insurers and could be saddled with enormous costs from the
attacks. 

German regulators said they were paying particularly close attention to
"suspect movements" in the stock of Munich Re AG, Europe's
second-biggest reinsurance company that provided substantial support for
many of the insurance policies written for the World Trade Center.  The
stock lost 13 percent of its value in the four days before the attacks. 

Sabine Reimer, a spokeswoman for the German federal securities agency,
said the review was a normal procedure in times of volatile movements. 

Munich Re executives say their company's own study of stock movements in
the days before the attack showed no unusual amount of short-selling,
which involves investors selling borrowed shares, expecting the price to
fall, and later buying them back at a lower price. 

European regulatory agencies have been consulting with the Securities
and Exchange Commission about their investigations, which include stock
movements of the French insurer AXA SA and Swiss Reinsurance Co. 

Ettore Candolfi, a board member of the Swiss stock exchange, said a
preliminary review showed several large block-trades in Swiss Re of up
to 16,000 shares in the four days before the attacks.  But he noted that
higher trading volumes may have been related to the fact that the
company had just released its first-half earnings, which fell short of
expectations. 

In Tokyo, Nobohiro Hayashi, a spokesman for Japan's financial
supervisory agency, said it was investigating possible stock
manipulation and dubious trading on the Tokyo and Osaka exchanges, to
determine whether short selling transactions were carried out by Mr. 
bin Laden's organization or any others who might have had prior
knowledge of the attacks. 

[Image] Copyright © 2001 The International Herald Tribune

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