“Put” options before 9/11

Immediately after 9/11 Christian Bertelson wrote a series of pieces in the SF Chronicle on “put” options short-selling airline stocks right before the attacks. Some speculated that the attackers planned to use their stock market winnings to finance their next operation.
The story disappeared, with no resolution one way or another. Bertelson still writes for the Chronicle and has written on Enron and other stories relating to energy policy and water policy.
Dave asked about this story below, and for everyone’s convenience I’ve put the URLs below the fold.



http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/19/BU184559.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/21/BU33737.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/22/BU27558.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/29/MN186128.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/03/BU187948.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/03/BU224108.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/03/BU224108.DTL


http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/07/BU197903.DTL

3 thoughts on ““Put” options before 9/11

  1. Here’s all the 9/11 commission has on this, page 499 in the Notes section:

    130. Highly publicized allegations of insider trading in advance of 9/11 generally rest on reports of unusual pre-9/11 trading activity in companies whose stock plummeted after the attacks. Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation. For example, the volume of put options—investments that pay off only when a stock drops in price—surged in the parent companies of United Airlines on September 6 and American Airlines on September 10—highly suspicious trading on its face.Yet, further investigation has revealed that the trading had no connection with 9/11. A single U.S.-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10. Similarly,much of the seemingly suspicious trading in American on September 10 was traced to a specific U.S.-based options trading newsletter, faxed to its subscribers on Sunday, September 9, which recommended these trades. These examples typify the evidence examined by the investigation. The SEC and the FBI, aided by other agencies and the securities industry, devoted enormous resources to investigating this issue, including securing the cooperation of many foreign governments. These investigators have found that the apparently suspicious consistently proved innocuous. Joseph Cella interview (Sept. 16, 2003; May 7, 2004; May 10–11, 2004); FBI briefing (Aug. 15, 2003); SEC memo,Division of Enforcement to SEC Chair and Commissioners,“Pre-September 11, 2001 Trading Review,”May 15, 2002; Ken Breen interview (Apr. 23, 2004); Ed G. interview (Feb. 3, 2004).

    In other words, just take our word for it. Just a coincidence.

  2. That’s actually better than I expected. I wasn’t thinking of the short-selling when I read the 9/11 report and I missed that.
    At the time of the Chronicle articles, the short-sellers had apparently disappeared. Perhaps by the time of the report thay’d surfaced to settle everything. But disappearing like that seems odd.
    Oddly, Joseph Cella is a right-wing Catholic who has blogged at Red State, where one Paul Cella is a regular.
    At this point, without further information I guess I’d just let this one drop. I had been thinking that the short-sellers were still mysterious and unknown.

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