Title: Israeli Authorities Investigate Potential Insider Trading Ahead of Hamas Attack
Israeli authorities are looking into claims by U.S. researchers that some investors may have had advance knowledge of a Hamas plan to attack Israel on Oct. 7 and used that information to profit from Israeli securities.
Research conducted by law professors Robert Jackson Jr from New York University and Joshua Mitts of Columbia University found significant short-selling of shares leading up to the attacks. This activity triggered a war nearly two months old.
According to the researchers, traders seemed to anticipate the events days before the attack. Their findings showed that short interest in the MSCI Israel Exchange Traded Fund (ETF) spiked on Oct. 2 based on data from the Financial Industry Regulatory Authority (FINRA). Additionally, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically just before the attack.
In response to the report, the Israel Securities Authority stated that the matter is under investigation by all relevant parties. The Israeli police did not immediately comment on the issue.
The researchers indicated that the short-selling activity prior to Oct. 7 exceeded the short-selling that occurred during numerous other periods of crisis, including the recession following the financial crisis in 2008, the 2014 Israel-Gaza war, and the COVID-19 pandemic.
For Leumi (LUMI.TA), Israel’s largest bank, 4.43 million new shares sold short over the period of September 14 to October 5 yielded profits of 3.2 billion shekels ($862 million) on top of additional short-selling.
The professors also noted the sharp and unusual increase in trading of risky short-dated options on Israeli companies just before the attacks. They concluded that traders informed about the coming attacks profited from these tragic events, indicating a gap in U.S. and international enforcement of legal prohibitions on informed trading.
The story of the new study was first reported on Israel’s financial news website The Marker.
Reporting by Steven Scheer; Editing by Howard Goller
($1 = 3.7120 shekels)
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