Bin Laden "Share Gains" Probe, by BBC

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Bin Laden "Share Gains" Probe, by BBC

Postby admin » Tue Mar 22, 2016 5:48 am

Bin Laden 'share gains' probe
by BBC
18 September, 2001

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Osama Bin Laden: Did market speculation fund terrorism?

Investigations are under way in Europe, Japan and the US into unusual share price movements shortly before last week's terror attacks on America.

The suggestion is that Islamist dissident Osama Bin Laden, or some of his supporters, may have tried to profit by engaging in "short selling" of stocks likely to be affected by the atrocities.

Selling short allows investors to bet that a stock will decline in value.

The sectors in the spotlight include reinsurance, airlines and armaments.

Germany's securities watchdog BaWe said it had launched a probe into "suspect" share movements in the run up to the attacks.

Harvey Pitt, chairman of the US Securities & Exchange Commission said: "We've heard those reports about terrorists' involvement in our markets.

"Our enforcement division has been looking into a variety of market actions that could be linked to these terrible acts including the subjects of the rumours."

Market manipulation

So far, there is no clear evidence that share movements - which are constantly monitored in any case by financial watchdogs for signs of insider dealing - are linked to Bin Laden or his followers.

We are taking a routine look at the share prices of various stocks. This will involve the examination of all types of shares

-- BaWe spokeswoman


"We are taking a routine look at the share prices of various stocks. This will involve the examination of all types of shares," a BaWe spokeswoman said.

In any case, the economic gloom which has shrouded world markets in recent weeks has triggered huge volumes of short selling.

The sectors worst affected by this routine trend include those, like airlines, which are now facing severe financial damage in the wake of the attacks on New York and Washington.

But the German watchdog is understood to have informed America's Securities and Exchange Commission (SEC) of its suspicions.

Likely sectors

The investigation is expected to focus on Munich Re, the world's biggest reinsurance company, which has lost 22% of its value in the past two months, 13% of that in the week before the attacks on America.

The movement could have been triggered by those aware of the planned attacks short-selling the firm's shares.

Reinsurers Swiss Re and France's Axa also suffered big falls in their share price in the run up to Tuesday's attacks.

The losses took place against a backdrop of falling markets.

But shares in reinsurance firms, viewed as "defensive stocks", might have been expected to hold their value in a declining market, some observers said.

Reinsurance companies provide coverage for losses by insurers.

The UK's Financial Services Authority is also taking part in the investigation, even though FSA sources indicate that there are no concrete signs of any such suspicious price movements in the UK.

Financial links

Bin Laden is thought to have indulged in stock market speculation in the past.

According to reports in Italian newspaper Corriere della Sera, he used a Milan brokerage to invest in European markets.

The name of the broker has not been released, the newspaper added.

It said that European authorities were investigating possible financial links to Bin Laden in Luxembourg, Switzerland, Monte Carlo and Cyprus, where Bin Laden's organisation is reported to have had a base, with a company, offices and staff.

Italy's stock market authority, Consob, said it was investigating suspicious share movements on the day of the attack, as well as the previous day.

Signs of foul play

Financial experts have said it is possible that those behind the attack could have profited from the subsequent market fall-out.

But they would have had to put very large and conspicuous short positions in the market to put underlying pressure on big stocks such as Munich Re.

One expert, who did not want to be named, said it would probably have taken several years to put big short positions in place without detection.

"It is possible - they are right to check it - but it is not that likely," he added.

Japanese investigation

A separate investigation into possible profiteering is under way in Japan.

I think that there are terrorist states and organisations behind speculation on the international markets

-- Antonio Martino, Italy's foreign minister


"The Securities and Exchange Surveillance Commission Friday started to investigate if Mr Osama Bin Laden, who is suspected of masterminding the terrorist attacks in the United States, has traded in securities markets in Japan," Japanese news wire Jiji Press reported

The commission's investigation is understood to be focusing on the trading of futures contracts.

In the futures market, investors in essence use small bets to take on large equity positions, and can make huge profits if prices go in the desired direction.

The news agency said Bin Laden had made large profits by trading futures contracts in European stock and foreign exchange markets.

Greater transparency

Some reports in the US have suggested that last week's attacks may have been funded by speculation on the European stock markets.

The news is likely to lead to calls for greater transparency in share dealing, to make it harder for market players to conceal their identity.

The Organisation for Economic Co-operation and Development (OECD) has repeatedly called for the regulations to be tightened to prevent money laundering and profiteering by criminal groups.

Italy's defence minister Antonio Martino fuelled debate on Monday by saying that he thought terrorist organisations engaged in speculation on international financial markets.

Speaking in an interview with Italian newspaper, Mr Martino said: "I think that there are terrorist states and organisations behind speculation on the international markets."

Meanwhile, US authorities are reported to be investigating whether profits from European share trading by groups linked to Bin Laden could have been placed in US banks.
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