"This is the worst case of insider trading ever."

Discussion in 'Trading' started by trader556, Sep 15, 2003.

  1. Now we're talking some serious cash and implications


    *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.

    In light of the weighty and compelling evidence,*

    gggggg where is the investigation?

    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,

    additional info, complete article here:


    Scary $hit... What do you all think about this?
  2. biggest mistake was to give the SEC the task to investigate the matter :(

    spitzer/FBI would have gotton to the bottom of this already
  3. Unless one of you has access to some historical data, you aren't going anywhere. I tried down in the Options forum. You'd have to be able to lay out a laundry list of the positions to get anyone to do anything about it. Otherwise, you have to trust the insights of powerhouses like O'Neill.

  4. what kind of statement is that in your signature??
    "osama bin laden still walks free"

    are you proud of that?? (b/c if you are.......)
    or is it a message that he need to be killed (i can't wait for the day...)
  5. this is nonsense. take a look at the trade records yourself, look at the charts before 9.11 . the downtrends were already in place.

  6. Actually the way to do it is with a scanner just like we scan for stocks but this one would go through broker account activity instead of markets for whatever the appropriate parameters are. Probably 500 guys here at ET that could write that.

    I never understood why a lot of these international bank secrecy holdouts didn't get chopped away after 9/11 anyway. Financial privacy seems pretty questionable to me considering all that is reported by law about you anyway.

  7. vega


    Obviously whoever bought those puts made a killing, but at the same time drew a lot of attention to themselves. Had they bought the deep in the money call, and sold the stock against it (synthetic put,same risk-reward profile) and possibly even collected a dividend depending on how long they were holding the position, that way people probably wouldn't have looked that closely at those trades. They would have been looked at, but if they knew anything about options, they could have made the case that it was a dividend play or something like that. Using the synthetic put attracts a lot less attention then going into the pit and saying I want to buy 5000 deep out of the money puts !!!!!!!!!

  8. I'm not a conspiracy nut, but I think I remember reading that Buzzy Krongard (former Director of the CIA) was a board member of BT Alex Brown, holder of one of the biggest put positions on UAL going into 911.
  9. Like marketsurfer ,I beleive the downtrend was already in place.I held over 100 put options (djx-dow industrial avg.),all in the green, and most in the 300% to 500% profit range.
  10. Yes it was a downtrend. But, that part of the article where it said only United and American had heavy put buying while Delta didn't is pretty noteworthy imo.
    #10     Sep 15, 2003