© Reuters. Buildings lie in break in Gaza, amid the continuing battle between Israel and the Palestinian Islamist group Hamas, as seen from southern Israel, December 4, 2023. REUTERS/Athit Perawongmetha
By Steven Scheer
JERUSALEM (Reuters) – Israeli authorities are investigating claims by U.S. researchers that some buyers could have identified prematurely of a Hamas plan to assault Israel on Oct. 7 and used that data to revenue from Israeli securities.
Analysis by legislation professors Robert Jackson Jr from New York College and Joshua Mitts of Columbia College discovered vital short-selling of shares main as much as the assaults, which triggered a battle practically two months outdated.
“Days before the attack, traders appeared to anticipate the events to come,” they wrote, citing quick curiosity within the MSCI Israel Trade Traded Fund (ETF) that “suddenly, and significantly, spiked” on Oct. 2 primarily based on knowledge from the Monetary Business Regulatory Authority (FINRA).
“And just before the attack, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically,” they wrote of their 66-page report.
In response, the TASE referred Reuters to the Israel Securities Authority, which mentioned: “The matter is known to the authority and is under investigation by all the relevant parties.”
A spokeswoman for the securities regulator didn’t elaborate, and Israeli police didn’t instantly remark.
The researchers mentioned short-selling, wherein buyers count on the share worth to fall, permitting it to be purchased again at a lower cost at a revenue, previous to Oct. 7 “exceeded the short- selling that occurred during numerous other periods of crisis.”
That features the recession following the monetary disaster in 2008, the 2014 Israel-Gaza battle, and the COVID-19 pandemic.
They wrote that for Leumi, Israel’s largest financial institution, 4.43 million new shares offered quick over the Sept. 14 to Oct. 5 interval yielded earnings of three.2 billion shekels ($862 million) on that further short-selling.
“Although we see no aggregate increase in shorting of Israeli companies on U.S. exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks,” they mentioned.
“Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in gaps in U.S. and international enforcement of legal prohibitions on informed trading.”
The professors referred to patterns in early April when it was reported that Hamas was initially planning its assault on Israel. “Short volume in EIS (the MSCI Israel ETF) peaked on April 3 at levels very similar to those observed on Oct. 2, and was far higher by an order of magnitude than other days prior to April 3,” they mentioned.
The story of the brand new examine was first reported on Israel’s monetary information web site The Marker.
($1 = 3.7120 shekels)
