According to an article in The London Times today, Société Générale rogue trader Jérôme Kerviel profited enormously on the day of the 7/7 London bombings. He has also revealed how his company
made huge profits on September 11th 2001, prompting some to return to questions over insider foreknowledge of both terrorist attacks.
“The best trading day in the history of Société Générale was September 11, 2001,” he said. “At least, that’s what one of my managers told me. It seems that profits were colossal that day.
“I had a similar experience during the London attacks in July 2005.”
A few days earlier he had bet on a fall in the share price of Allianz, the German insurance giant, he told Le Parisien. Everyone was losing money when the 7/7 bombings sent the insurance sector into a downward spiral “except for me”, he said. “Thanks to the positions I had, I earned €500,000 in a few minutes. It was the jackpot. I was jubilant.”
After the celebrations Mr Kerviel said he paused for thought. “I understood that I was having fun when people had just been hit by the bombs. I ran to the toilet and I was sick. But the moment of weakness did not last long. I went back into the trading room and I returned to work.”
Kerviel was charged almost exactly one year ago in the Société Générale trading loss incident which cost the financial services company an estimated €4.9 billion.
Until the Bernard Madoff fraud incident last month, it was reported to be the largest fraud in banking history.
Société Générale claimed that Kerviel worked the trades alone, and without its authorization. Kerviel told investigators that such practices are widespread and that huge profits routinely give the upper echelons of financial institutions cause to turn a blind eye.
Many questions have been raised regarding massive trades that foreshadowed the events of 9/11, with put options placed in large quantities against American and United Airliners in the days immediately prior to the attacks.
In the case of the London bombings, the pound fell 6 per cent against the dollar for no apparent reason in the days before the attack.
“Currencies of established countries simply do not fall that fast based upon any kind of economic or financial analysis,” said a 35 year veteran economist. “Somebody – somewhere – knew something. Or maybe I should say ’somebodies.’”
It is considered that such anomalous activity betrays prior knowledge of the incidents.
We have since seen other suspicious trading incidents dovetailing with foiled terror attacks. Specifically, in August 2006, surrounding the infamous “liquid bomb plot” and one year later in August 2007 with the so-called “Bin Laden trades” when a mystery trader placed 245,000 put options on the Dow Jones Eurostoxx 50 index.
Cramer: Black Monday Could Have Been “Financial Terrorism” CNBC host compares crash to pre-9/11 short-selling of airline stocks as SEC enforces ban to fight “market manipulation”
CNBC host Jim Cramer says that financial terrorism could have been behind Monday’s stock market crash as part of a conspiracy to “bring down capitalism,” as the SEC this morning announced a ban on short-selling in an effort to fight market manipulation.
“Traditional people who are allegedly shorting are not….it could be financial terrorism, what a great way to take down America….maybe they want to find out who is doing this shorting like in 9/11, remember the airlines went down first and people thought it was Bin Laden,” said Cramer.
A record number of ‘put’ options, speculation that the stock of a company will fall, were placed on American and United Airlines in the days preceding 9/11. This despite a September 10th Reuters report headlined ‘Airline stocks set to fly.’
Between September 6 and 7, the Chicago Board Options Exchange saw purchases of 4,744 put options on United Airlines, but only 396 call options. On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls.
However, independent investigators that looked into who benefited from advance knowledge of the terrorist attack found a trail not to Bin Laden, but to Alex Brown/Deutsche Bank – chaired up until 1997 by executive director of the CIA, Buzzy Krongard.
Cramer encouraged authorities to look at who was behind short selling stocks this week because the situation represented a “financial national emergency.”
“I think the FSA needs to find out….whether this is someone who wants to bring down capitalism,” added the host, noting that Hank Paulson himself was accused of helping to bring down capitalism when the government seized control of Fannie Mae.
“Obviously the financial terrorism thing for me has to be put on the table because the regular short sellers are not doing this, they’re not doing this,” stated Cramer.
The Securities and Exchange Commission announced this morning that investors would be temporarily prevented from making bets on stock declines on 799 financial stocks. The ban will remain in place for 10 days and could be extended for up to 30 days.
SEC Chairman Christopher Cox said, “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets. The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
Cramer disagreed with the move, stating, “To ban short selling is wrong, unless you had reason to believe that it was a force you would normally use physical terrorism that is using financial terrorism.”
Six years after the attacks, a study has been released by two professors of the university of Zurich on the atypical volumes of put options placed before the attacks on World Trade Centre.
The authors, one specialist in derivatives, the other a specialist in econometrics, studied the options to sell (put options), used to speculate on the fall in the price of 20 large American groups.
(Read the full the French article below – Lesage translation)
“Atypical volumes, very rare on certain titles, lead to suspicions of insider trading. ” Six years after the attacks of World Trade Center, it is the disconcerting conclusion of a recent study by Marc Chesney and Loriano Mancini, professors at the University of Zurich.
The authors, one a specialist in derivatives, the other a specialist in econometrics, worked on the options to sell, used to speculate on the fall, of 20 great American groups, in particular in aeronautics and finance.
Their analysis relates to the transactions carried out between the 6 and September 10, 2001 compared to the average volumes recorded over long period (ten years for the majority of the companies).
The two specialists, in addition, calculated the probability of several options of the same sector having significant volumes in a few days.
“We tried to see whether the movements recorded on certain titles little before the attacks were common. We show that, for certain companies like American Airlines, United Airlines, Merrill Lynch, Bank of America, Citigroup, Marsh & McLehnan, movements are scarce from a statistical point of view, a fortiori in comparison to the volumes observed for other values like Coke or Hewlett-Packard, explains Marc Chesney, a former professor with (the prestigious business school) HEC, author of “Money Laundering and Financing of Terrorism” (published by Ellipses Editions).
“For example, 1.535 contracts of options to sell in the term October 2001, with 30 dollars, were exchanged on American Airlines on September 10, against a daily average of approximately 24 contracts over the three previous weeks “the fact that the market is bear at the time” does not explain enough these surprising volumes “
“Enormous” profits:
The authors also studied the profitability of the options to sell, and of purchase, for an investor having bought a product between the 6th and the 10th “For certain titles, the profits were enormous. For example, investors having acquired options to sell of Citigroup with a maturity at October 2001 could potentially have gained more than 15 million dollars “,He said.
The conjunction of the data between volumes and profitability, the two authors conclude “the probability that there were offences of initiates (insider trading) is strong for American Airlines, United Airlines, Merrill Lynch, Bank of America, Citigroup and JP Morgan.
It is not a legal proof but it is the findings of statistical methods confirming signs of irregularities “.
The study is certainly not the first on possible insider trading in connection to the attacks but it is disconcerting in comparison with the conclusions of the regulatory authorities. As of September 2001, the Securities Exchange Commission and its European counterparts were interested in the atypical stock exchange movements before the attacks.
In an official statement of July 2004, the American regulator stated that it examined more than 9,5 million transactions in the weeks preceding September 11, then delivered its conclusions to the National Commission on the terrorist attacks (The 9/11 Comission).
According to this commission, unusual transactions certainly took place but each had a non-criminal explanation. The authorities evoke, for example, analyst’s investor advice to explain certain rises of volumes.
Same tone from the ex-COB now the AMF (French SEC), which states in its annual report of 2002: “the elements obtained forbid to show any evidence that financial groups related to the instigators of the attacks could have used the Stock Exchange to realise operations”
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