Satanic deals

“Terror groups have shown their capacity for evil, but this is among the worst displays of profiting from the sufferings of humanity.

Last 5 November, the local stock exchange issued guidelines for short selling, which makes it an accepted way of dealing in the stock market despite ethical questions, as it is betting that a share of stock or the whole market is bound to weaken.

That ethical question was underlined in the brutal 7 October attack by the Hamas terror horde on Israel that resulted in the death of 1,200 individuals as probers have found that financiers of terrorism may have generated windfalls from short selling.

The US intelligence community is looking into what it believes to be groups that had advanced knowledge of the attack and had bet heavily against Israeli firms and American companies with massive exposure in Israel.

Robert Jackson Jr., a former commissioner of America’s Securities and Exchange Commission, and Joshua Mitts of Columbia University wrote a paper suggesting that advanced knowledge of Hamas’ plan was used to profit from the crash of the Israeli stock exchange.

Short selling is simply making money out of nothing by betting that a particular condition will deteriorate soon.

It is executed, for instance, by borrowing 10 company shares and then immediately selling these on the stock market for P10 each, generating P100. If the price drops to P5 per share, the shorted shares are repurchased at P50 and returned to the broker.

The short sale thus generated P50 for the borrower of the shares, who did not have to shell out any money.

The American researchers looked into the trading patterns in Israeli shares in the weeks before the attack and found anomalies consistent with a grim form of insider trading.

A surge in short sales was noted on the New York Stock Exchange. Days before the Hamas assault, there was a notable increase in bets against the value of Israeli companies.

This suggested that some traders may have possessed advanced knowledge of the impending terror attack and capitalized on it, according to the researchers.

The Tel Aviv Stock Exchange, however, said the claims were inaccurate, as there was no unusual trading ahead of the attack.

The research paper revealed that the bets against the MSCI Israel Exchange Traded Fund in the days leading to 7 October were significantly higher than the levels of short selling observed during the Covid-19 pandemic, the 2014 Israel-Gaza war, and the 2008 global financial crisis.

If true, this could be the most lowdown display of greed on Wall Street and elsewhere in the capital markets.

“Our findings suggest that traders informed about the coming attacks profited from these tragic events,” the authors of the research wrote.

The paper titled “Trading on Terror?” said that on 2 October, five days before the surprise attack by Hamas, “nearly 100 percent of the off-exchange trading volume in the MSCI Israel ETF… consisted of short selling.”

“Days before the attack, traders appeared to anticipate the events to come,” the research paper said.

One of the authors suggested that global regulators probe their bourses for evidence of such a diabolical enterprise.

“We are only seeing the tip of the iceberg,” according to one of the authors. “There is a lot more out there that we can’t pick up on but that regulators should be looking at.”

Terror groups have shown their capacity for evil, but this is among the worst displays of profiting from the sufferings of humanity.

While it contributes liquidity to the market, regulators should review the rules or tighten disclosure procedures regarding short selling, or this could be a means of fundraising for terror.

The possibilities for terrorists to generate funding from the scheme are limitless.

It would be as easy for those with the capability to sow mayhem as betting that shares of a big company will fall and then launch a terror attack on it.

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Credit belongs to: tribune.net.ph