Is this true?: 9/11 Insider Trading ~ Who Made Money from the WTC and Pentagon Tragedies?

18 Nov

They don’t talk about it on TV anymore, but someone tried to make money with unusual stock trades right before the terrorist attacks of September 11.  Who knew to bet that United Airlines would lose money?

Suppressed Details of Criminal Insider Trading Lead Directly into the CIA’s Highest Ranks


CIA Executive Director “Buzzy” Krongard managed firm that handled “PUT” options on United Airline Stock  
by Michael C. Ruppert



Update:  Blackwater and the Brothers Krongard: How Cookie Crumbled

FTW – October 9, 2001 – Although uniformly ignored by the mainstream U.S. media, there is abundant and clear evidence that a number of transactions in financial markets indicated specific (criminal) foreknowledge of the September 11 attacks on the World Trade Center and the Pentagon. In the case of at least one of these trades — which has left a $2.5 million prize unclaimed — the firm used to place the “put options” on United Airlines stock was, until 1998, managed by the man who is now in the number three Executive Director position at the Central Intelligence Agency.   

Until 1997 A.B. “Buzzy” Krongard had been Chairman of the investment bank A.B. Brown. A.B. Brown was acquired by Banker’s Trust in 1997. Krongard then became, as part of the merger, Vice Chairman of Banker’s Trust-AB Brown, one of 20 major U.S. banks named by Senator Carl Levin this year as being connected to money laundering. Krongard’s last position at Banker’s Trust (BT) was to oversee “private client relations.” In this capacity he had direct hands-on relations with some of the wealthiest people in the world in a kind of specialized banking operation that has been identified by the U.S. Senate and other investigators as being closely connected to the laundering of drug money.



Krongard joined the CIA in 1998 as counsel to CIA Director George Tenet. He was promoted to CIA Executive Director by President Bush in March of this year. BT was acquired by Deutsche Bank in 1999. The combined firm is the single largest bank in Europe.  And, as we shall see, Deutsche Bank played several key roles in events connected to the September 11 attacks.


Before looking further into these relationships it is necessary to look at the insider trading information that is being ignored by Reuters, The New York Times and other mass media. It is well documented that the CIA has long monitored such trades – in real time – as potential warnings of terrorist attacks and other economic moves contrary to U.S. interests. Previous stories in FTW have specifically highlighted the use of Promis software to monitor such trades. 

It is necessary to understand only two key financial terms to understand the significance of these trades, “selling short” and “put options”.

“Selling Short” is the borrowing of stock, selling it at current market prices, but not being required to actually produce the stock for some time. If the stock falls precipitously after the short contract is entered, the seller can then fulfill the contract by buying the stock after the price has fallen and complete the contract at the pre-crash price. These contracts often have a window of as long as four months. 

“Put Options,” are contracts giving the buyer the option to sell stocks at a later date. Purchased at nominal prices of, for example, $1.00 per share, they are sold in blocks of 100 shares. If exercised, they give the holder the option of selling selected stocks at a future date at a price set when the contract is issued. Thus, for an investment of $10,000 it might be possible to tie up 10,000 shares of United or American Airlines at $100 per share, and the seller of the option is then obligated to buy them if the option is executed. If the stock has fallen to $50 when the contract matures, the holder of the option can purchase the shares for $50 and immediately sell them for $100 – regardless of where the market then stands. A call option is the reverse of a put option, which is, in effect, a derivatives bet that the stock price will go up.

  A September 21 story by the Israeli Herzliyya International Policy Institute for Counterterrorism, entitled “Black Tuesday: The World’s Largest Insider Trading Scam?” documented the following trades connected to the September 11 attacks:

 –        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… Assuming that 4,000 of the options were bought by people with advance knowledge of the imminent attacks, these “insiders” would have profited by almost $5 million.

–        On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance;… Again, assuming that 4,000 of these options trades represent “insiders,” they would represent a gain of about $4 million.

–        [The levels of put options purchased above were more than six times higher than normal.]

–        No similar trading in other airlines occurred on the Chicago exchange in the days immediately preceding Black Tuesday.

–        Morgan Stanley Dean Witter & Co., which occupied 22 floors of the World Trade Center, saw 2,157 of its October $45 put options bought in the three trading days before Black Tuesday; this compares to an average of 27 contracts per day before September 6. Morgan Stanley’s share price fell from $48.90 to $42.50 in the aftermath of the attacks. Assuming that 2,000 of these options contracts were bought based upon knowledge of the approaching attacks, their purchasers could have profited by at least $1.2 million. Merrill Lynch & Co., with headquarters near the Twin Towers, saw 12,215 October $45 put options bought in the four trading days before the attacks; the previous average volume in those shares had been 252 contracts per day [a 1200% increase!]. When trading resumed, Merrill’s shares fell from $46.88 to $41.50; assuming that 11,000 option contracts were bought by “insiders,” their profit would have been about $5.5 million.

–        European regulators are examining trades in Germany’s Munich Re, Switzerland’s Swiss Re, and AXA of France, all major reinsurers with exposure to the Black Tuesday disaster. [FTW Note: AXA also owns more than 25% of American Airlines stock making the attacks a “double whammy” for them.]

On September 29, 2001 – in a vital story that has gone unnoticed by the major media – the San Francisco Chronicle reported, “Investors have yet to collect more than $2.5 million in profits they made trading options in the stock of United Airlines before the Sept. 11, terrorist attacks, according to a source familiar with the trades and market data.

“The uncollected money raises suspicions that the investors – whose identities and nationalities have not been made public – had advance knowledge of the strikes.” They don’t dare show up now. The suspension of trading for four days after the attacks made it impossible to cash-out quickly and claim the prize before investigators started looking.



“… October series options for UAL Corp. were purchased in highly unusual volumes three trading days before the terrorist attacks for a total outlay of $2,070; investors bought the option contracts, each representing 100 shares, for 90 cents each. [This represents 230,000 shares].Those options are now selling at more than $12 each. There are still 2,313 so-called “put” options outstanding[valued at $2.77 million and representing 231,300 shares] according to the Options Clearinghouse Corp.”

“…The source familiar with the United trades identified Deutsche Bank Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of these options…” This was the operation managed by Krongard until as recently as 1998.

As reported in other news stories, Deutsche Bank was also the hub of insider trading activity connected to Munich Re. just before the attacks.


Understanding the interrelationships between CIA and the banking and brokerage world is critical to grasping the already frightening implications of the above revelations. Let’s look at the history of CIA, Wall Street and the big banks by looking at some of the key players in CIA’s history.

Clark Clifford – The National Security Act of 1947 was written by Clark Clifford, a Democratic Party powerhouse, former Secretary of Defense, and one-time advisor to President Harry Truman. In the 1980s, as Chairman of First American Bancshares, Clifford was instrumental in getting the corrupt CIA drug bank BCCI a license to operate on American shores. His profession: Wall Street lawyer and banker.

John Foster and Allen Dulles – These two brothers “designed” the CIA for Clifford. Both were active in intelligence operations during WW II. Allen Dulles was the U.S. Ambassador to Switzerland where he met frequently with Nazi leaders and looked after U.S. investments in Germany. John Foster went on to become Secretary of State under Dwight Eisenhower and Allen went on to serve as CIA Director under Eisenhower and was later fired by JFK. Their professions: partners in the most powerful – to this day – Wall Street law firm of Sullivan, Cromwell.

Bill Casey – Ronald Reagan’s CIA Director and OSS veteran who served as chief wrangler during the Iran-Contra years was, under President Richard Nixon, Chairman of the Securities and Exchange Commission. His profession: Wall Street lawyer and stockbroker.

David Doherty – The current Vice President of the New York Stock Exchange for enforcement is the retired General Counsel of the Central Intelligence Agency.

George Herbert Walker Bush – President from 1989 to January 1993, also served as CIA Director for 13 months from 1976-7. He is now a paid consultant to the Carlyle Group, the 11th largest defense contractor in the nation, which also shares joint investments with the bin Laden family.

A.B. “Buzzy” Krongard – The current Executive Director of the Central Intelligence Agency is the former Chairman of the investment bank A.B. Brown and former Vice Chairman of Banker’s Trust.

John Deutch – This retired CIA Director from the Clinton Administration currently sits on the board at Citigroup, the nation’s second largest bank, which has been repeatedly and overtly involved in the documented laundering of drug money. This includes Citigroup’s 2001 purchase of a Mexican bank known to launder drug money, Banamex.

Nora Slatkin – This retired CIA Executive Director also sits on Citibank’s board.

Maurice “Hank” Greenburg – The CEO of AIG insurance, manager of the third largest capital investment pool in the world, was floated as a possible CIA Director in 1995. FTW exposed Greenberg’s and AIG’s long connection to CIA drug trafficking and covert operations in a two-part series that was interrupted just prior to the attacks of September 11. AIG’s stock has bounced back remarkably well since the attacks. To read that story, please go to

One wonders how much damning evidence is necessary to respond to what is now irrefutable proof that CIA knew about the attacks and did not stop them. Whatever our government is doing, whatever the CIA is doing, it is clearly NOT in the interests of the American people, especially those who died on September 11.

[© COPYRIGHT, 2001, Michael C. Ruppert and FTWPublications,


2 Responses to “Is this true?: 9/11 Insider Trading ~ Who Made Money from the WTC and Pentagon Tragedies?”

  1. Vale November 18, 2015 at 9:02 pm #

    And this?: Who Made The AA ‘Put’ 
    Options The Days Prior To 911? 
    Can You Amplify On This Comment, Please?
    By Walter J. Burien, Jr.
    12-30-3 Question from:
    John Kaminski 
    12-30-3 Gentlemen: Can we all unite on a single task: finding out who placed the orders for the “put” options in the days immediately before 9/11? Discussions I’ve had in the enclosed e-mail seem to indicate this information is available and not protected by financial disclosure restrictions. Please examine the enclosed and brainstorm how we can get this information into the public sphere. It could be the thread to unravel the mystery. Discovering the names of those who apparently had prior knowledge of 9/11 as indicated by their “savvy” bets on the fortunes of United and American airlines are a necessary first step toward interrogating these individuals to find out where they got their information, something the law enforcement community should be doing but obviously isn’t. Best wishes,John Kaminski  REPLY FROM 
    Walter Burien 
    12-30-3 John: The five million dollars generated from the unclaimed 911 American Airline put option is truly chump change. The morning of 911, US Bonds moved in 3 to 4 minutes by 1.5 points back and forth three times or $1,500 per contract in seconds three times in less than 4 minutes. Most institutional traders trade in blocks of 500 to 3,000 contracts. Daily transactions are 350,000 to 400,000 contracts traded. The bond market trading was suspended about one half hour after the attack. When it reopened it moved in several days by 5 points. Someone holding 1000 contracts would have reaped five million dollars using one million. International and domestic stock index futures would have reaped over fifteen million using one million. Guess who made the biggest killing on short international and domestic stock index positions? What one group was holding tens of thousands of short positions going into 911 that reaped about 250 billion dollars in the blink of an eye? Hint! Begins with a G and ends with a T. The following disclosures are critical in understanding what you are and have seen taking place in the Markets. I will start off with a clip from Allen Greenspan, who was quoted in the Wall Street Journal in 2000 as saying he was: “Concerned about the eighty (80) trillion dollar international derivative market.” What he did not say was that the composite US Government investment funds were the primary user, player, manipulator, and profiteers within that 80 trillion dollar derivative market. The government investment funds are professional short players with no equal in opposition. A derivative gives the ability for selling the market “short” on paper even if you do not own the stock, commodity, currency, bonds, etc. The government investment managers over the last 30 years have become VERY familiar with using this tactic to reap in hundreds of billions of dollars each year! The government, who controls the economic reports, media coverage, and wealth is in a position to manipulate the above and create an environment to secure substantial revenue while everyone else is lying on the shoulder of the road bleeding to death. For three months prior and going into 911 the government investment funds had increased their short positions to the largest diversified short positions ever held by them. Look at any chart for a commodity or stock. Prices collapse four to five times faster than they rise. By selling on the domestic and international derivative markets, this makes the largest “quick” profits, and it is all on paper! You do not have to own the physical stock or commodity. By using derivatives, and if you have the ability to manipulate the market as was the case on 911 you take the money from those that do own the physical stock or commodity. EXAMPLES: Sell a gold futures contract (on paper) at $400 / oz then buy it back at $200, margin requirement to do so on 100 ounces is $1000. Now $400 – $200 = $200 x 100 ounces = $20,000 using $1000 Sell a call option or buy a put option on Microsoft stock at $100 per share and then liquidate the option at $50, you just made $50 per share on your “short” option. If the price moves in the direction of your short derivative position substantial moneys are made and you accomplish this not owning the physical stock, commodity, or currency. A monopoly (Such as: US Composite Government Funds) controlling the swings in the markets will reap unheard of profits on each and every dramatic swing. If there is no volatility, up or down then profits using derivatives are substantially reduced. The OVERALL government investment funds are in the trillions of dollars! Less than 450 managers control 80% of that revenue! They all, in so many words, subscribe to the same newsletter, and discuss strategy at the same club! As the public had hundreds of billions of dollars liquidated from their 401k plans as the market dove lower and lower, in a quick yo yo fashion, the government investment funds through the use of derivatives, transfers that wealth into their management accounts and hands….. Look at the bottom line on the government investment portfolios! They will have taken substantial losses on their physical stock holdings but, their derivative profits will greatly offset those losses or in fact in many a case show a net profit towards the overall results! (Look carefully at cash withdraws / transfers made offsetting those profits to give the appearance of an annual operating loss) The public provides liquidity in the market place to allow the biggest monopoly the world has ever known to secure more wealth. Your government at work! Compare the private sector’s return on investments over 2001, 2002 (dismal) compared to government’s “NET” return over the same period of time. (Substantial) US Government investment funds have and are doing the same on the International markets as well. Through the use of derivatives, the “substantial” US Government investment funds control the stock market, gold prices, currency prices, etc. Absolute financial control by the largest monopoly on Earth! Any, commodity, International Stock market, or corporate complex’s value can be strongly suppressed or over inflated for years by a monopoly using derivatives. Controlled by paper transactions for commitments to buy or sell without physical ownership of what is bought or sold. It does not matter if prices go up or collapses. When the US Government investment managers are moving in tandem, controlling the events and news, they reap obscene returns THROUGH THE USE OF DERIVATIVES! If you look at “WHO” was holding the majority of “SHORT” derivative positions on the domestic and international stock index markets prior to 911, and then reaped over a trillion dollars in profits within weeks from the ensuing collapse of those physical markets, you will find in that group who was responsible for 911. There is one problem in finding this out. That being, government controls the release of that information by and through the Federal agencies of the SEC (Securities Exchange Commission) and CFTC (Commodities Futures Trading Commission). A small conflict of interest exists here, being that the results of that study would show US government was holding the majority of the international and domestic “SHORT” positions! The airline stock option transaction at issue and that most people have heard about promoted in the news is truly minuscule chump change in comparison. Exchange members have access to and keep archive records of the data from their brokerage houses and all other member houses and they are under a nondisclosure agreement. BUT, it would not prevent them, if they wished to do so, too tabulate the transactions and issue a “Generic” report, a specific and targeted generic report. Here, you would need to have a significant contact in the financial community of members. Even though this type of generic report would not violate their nondisclosure agreement, they would be dead if they issued the report based on what it would show and strongly evidence (government investment funds were the primary benefactor), so anonymity would have to be kept when the generic report of the specific stream findings was released. The generic report would mandate disclosure of the specifics behind the report by public and international outcry. Yes, government is preparing for an uprising in this country. So they needed to direct the public eye to a far away enemy so that they can secure control here. Greed has thrived within government circles. The results of that greed have been obscene and the resulting damage to the morals and health of this country in response is sickening. The results of the takeover of the American wealth has been done almost exclusively on paper through manipulation of legislature, the judiciary, and Attorney complex over the last 60 years with the cooperation of the syndicated news media and education. With the conquest being done by transferring the wealth on paper, the consequences for the “takers” was virtually nonexistent! The government trading accounts push 65% of the paper in these markets. Government investment funds are required disclosure if pursued. The CFTC and SEC data tape is definitive for volume and positions held every second of the day. The general position streams have no restrictions from disclosure between exchange members. They archive and share it live within the financial community of exchange members who are producing and clearing the data.. When it comes down to individual accounts, private are confidential but government investment funds handled by private managers are not and cannot be held confidential if pried open by any definitive court order from a competent jurisdiction. Management for all intents and purposes waves enforcement of nondisclosure rules when handling government funds. An intentional cover-up on any disclosure coming forth in this arena per overall government investment funds positions held would be nothing other than treason of the strongest degree, under any color of refusal. The showing of derivative transactions both on the domestic and international fronts would burn the government’s facade alive. Based on the fund trackers, government fund accounts were holding their largest short positions “ever” going into 911. Well, the natives are getting restless! The prize is great, ownership of this country and future control of the planet! Hmm! Homeland Security! But you must ask yourself, “security for whom?” Is the answer becoming obvious to you yet? Natives can be pesky little creatures when they realize their families, wives, and children have been raped. They can become very hostile when they realize that their wealth was slipped right out of their hands with no consequence to the “takers.” Natives can revolt when they realize these things, and take resentment for the “takers” continued push to indoctrinate them and their children so that what has been taken and is being taken will continue unabated. Here is an age old tactic the takers use when the natives get restless: When the takers hear the random war drums starting to beat at home stronger and stronger from the natives due to the abuses of the takers, the takers will use their well structured organization to re-create the pounding of the war drums at home with their selected target afar now being marketed to the natives. By doing so the native’s attention and hostility can be carefully controlled and directed away from the takers and towards some “other” entity, the created enemy afar. When, and as this happens, look out! The takers create a scenario of absolute control, and within this type of environment, the takers will become ruthless beyond all measures after solidifying additional control. WW1, WW2, WW3? The war drums are being played consistently louder by the takers! The natives cannot afford to sit on the sidelines here! Walter Burien P. O. Box 2112 Saint Johns, Arizona 85936 Video Release – 12/12/03 – TNT (The National Tea-Party) Self Sufficiency in Government “Without” Taxation Walter Burien (AKA: Bubien) CTA (Commodity Trading Advisor) of 14 years (1978-92) National Sales Manager: US Trading Championship Money Managers Verified Ratings 10 years. (1982-1992) Tenant – 1WTC, NY, NY 1979 – 81 Video Release – 12/12/03 TNT (The National Tea-Party) Self Sufficiency in Government “Without” Taxation SUGESTION FROM: Walter Burien The one thing I would love to see someone do is: Show on the Internet the video of Bush’s reactions when he was told 1 WTC tower was hit and then a few minutes later after the second was hit as he addressed that group of kids at school in FL. (Many have seen this) He showed almost zero (0) reaction and continued addressing the kids for some 20 – 25 minutes after being told. AND THEN SHOW A “WHAT IF” INTERNET VIDEO THAT SHOWS: The same setting but this time the person comes in and tells Bush two planes attempted to hit the WTC Towers but were shot down before they did. And now Bush spins away from the podium and yells “What” and he immediately leaves the classroom, being upset and startled as he immediately leaves with his aids. ~//~ Visual reality speaks tons… I would LOVE to see someone put the above up on the Web, and do it soon! The hit counter on that page would start smoking, if not burst into flames. I was a tenant at WTC1 in 1979-81 The primary concern any of the tenants had 20 years ago was a hijacked plane being flown into the towers. Here is the “Key” to unlock the door: The extensive flight logs for 20 years from the 3 military bases in the area, and Port Authority responding to air threats is exemplary. Thousands of sorties run in response to threats, practice runs, false alarms, done weekly or daily over 20 years. Back in the late seventies the NY Post ran an article about the Port Authority bragging how their manned 24/7 response helicopter would be in the air within 4 minutes of an alert call going out per possible air threats to the WTC towers. There is one occasion that I am aware of, or in most probabilities that any one else is aware of in this exemplary record of response to air threats covering a period of over twenty years that the intercepts did not launch and were told to stand down, after going on high alert within a minute or two of the threat, not from just one threat but then by two, then three. That date was 9/11/01 This in itself is the most condemning fact of them all when that 20-year record is brought to light. The motive then becomes crystal clear in review of that exemplary response record to threats from the air against the WTC towers. No, off course or negligent aircraft came close. They were always intercepted and told to change their course or they would be blown out of the sky. It was a no fly zone and this happened to many pilots that intentionally or unintentionally flew to close to the WTC towers over those 20 years. “Don’t turn you back and look the other way. Shoot a wolf in the chicken coop today!” Walter Burien


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  2. Vale November 18, 2015 at 8:12 pm #

    And this?: Terrorist Financing Staff Monograph

    Appendix B: Securities Trading

    This appendix describes the staff and U.S. government investigations into the issue of whether anyone with foreknowledge of the 9/11 attacks profited through securities trading, and explains the conclusion in the Commission’s final report that extensive government investigation has revealed no evidence of such illicit trading.

    Almost since 9/11 itself, there have been consistent reports that massive “insider trading” preceded the attacks, enabling persons apparently affiliated with al Qaeda to reap huge profits. The Commission has found no evidence to support these reports. To the contrary, exhaustive investigation by federal law enforcement, in conjunction with the securities industry, has found no evidence that anyone with advance knowledge of the terrorist attacks profited through securities transactions.

    Commission Staff Investigation

    Commission staff had unrestricted access to the U.S. government officials who led and conducted the investigation into securities trading in advance of 9/11. In addition to interviewing the key personnel, Commission staff reviewed the nonpublic government reports summarizing the investigative results as well as backup data, including spreadsheets, memoranda and other analyses, and reports of interviews with traders, securities industry participants, and other witnesses. We obtained and reviewed the reports of investigations done by certain major nongovernmental securities industries bodies who share responsibility with the government for monitoring securities trading in U.S. markets, including the New York Stock Exchange and the National Association of Securities Dealers Regulation, and interviewed witnesses from a key private-sector entity. Commission staff also reviewed information provided by foreign securities regulators, interviewed German law enforcement officials, and interviewed U.S. law enforcement personnel regarding their contacts with their foreign counterparts on securities trading.

    In addition, Commission staff drew on its review of extensive classified intelligence concerning al Qaeda and how it manages its operations and its finances, as well as debriefings of al Qaeda detainees, including 9/11 plot leader Khalid Sheikh Mohammed and other plot participants. This information proved useful in evaluating how closely held al Qaeda kept the 9/11 operation and the likelihood it would seek to profit from the attacks through securities trading.

    The U.S. Government Investigation of Trading in the United States

    The Securities and Exchange Commission (SEC) and the FBI, with the involvement of the Department of Justice, conducted the investigation of the allegation that there was illicit trading in advance of 9/11; numerous other agencies played a supporting role. 166

    The SEC’s chief of the Office of Market Surveillance initiated an investigation into pre9/11 trading on September 12, 2001. At a multi-agency meeting on September 17, at FBI headquarters, the SEC agreed to lead the insider trading investigation, keeping the FBI involved as necessary. The Department of Justice assigned a white-collar crime prosecutor from the U.S. Attorney’s Office in Brooklyn to work full-time on the investigation; he relocated to Washington, D.C., on September 18.

    The SEC undertook a massive investigation, which at various times involved more than 40 staff members from the SEC’s Division of Enforcement and Office of International Affairs. The SEC also took the lead on coordinating intensive investigations by the self-regulatory organizations (SROs) that share responsibility for monitoring the U.S. securities markets, including, among others, the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Regulation, and the Chicago Board Options Exchange. The investigation focused on securities of companies or industries that could have been expected to suffer economically from the terrorist attacks. Thus, the investigators analyzed trading in the following sectors: airlines, insurance, financial services, defense and aerospace, security services, and travel and leisure services, as well as companies with substantial operations in the area of the World Trade Center. The investigation also included broad-based funds that could have been affected by a major shock to the U.S. economy. Ultimately, the investigators analyzed trading in 103 individual companies and 32 index or exchange-traded funds and examined more than 9.5 million securities transactions.

    The investigators reviewed any trading activity that resulted in substantial profit from the terrorist attacks. Investments that profited from dropping stock prices drew great scrutiny, including short selling167 and the purchase of put options.168 The SEC has long experience in investigating insider trading violations, which can involve the use of these techniques by those who know of an impending event that will make stock prices fall.

    The investigators also sought to determine who profited from well-timed investments in industries that benefited from the terrorist attacks, such as the stock of defense and security companies, and who timely liquidated substantial holdings in companies likely to suffer from the attacks.

    The SEC investigators reviewed voluminous trading records to identify accounts that made trades that led to profits as a result of the attacks. The SEC followed up on any such trades by obtaining documents and, where appropriate, interviewing the traders to understand the rationale for the trades. The SEC also referred to the FBI any trade that resulted in substantial profit from the attacks—a much lower threshold for a criminal referral than it would normally employ. Consequently, the FBI conducted its own independent interviews of many of the potentially suspicious traders. The SROs, which have extensive market surveillance departments, played a key role in the SEC investigation by providing information and, in some cases, detailed reports to the commission. In addition, the SEC directly contacted 20 of the largest broker-dealers and asked them to survey their trading desks for any evidence of illicit trading activity. It also asked the Securities Industry Association—the broker-dealer trade group—to canvass its members for the same purpose.

    The SEC investigation had built-in redundancies to ensure that any suspicious trading would be caught. For example, the SEC reviewed massive transaction records to detect any suspicious option trading and also obtained reports, known as the Large Option Position Reports and Open Interest Distribution Reports, that identified the holders of substantial amounts of options without regard to when those options were purchased. Similarly, to ensure full coverage, the SEC obtained information from a number of entities that play a role in facilitating short sales. Between these efforts, the work of the SROs, and the outreach to industry, the chief SEC investigator expressed great confidence that the SEC investigation had detected any potentially suspicious trade.

    No Evidence of Illicit Trading in the United States

    The U.S. government investigation unequivocally concluded that there was no evidence of illicit trading in the U.S. markets with knowledge of the terrorist attacks. The Commission staff, after an independent review of the government investigation, has discovered no reason to doubt this conclusion.

    To understand our finding, it is critical to understand the transparency of the U.S. markets. No one can make a securities trade in the U.S. markets without leaving a paper trail that the SEC can easily access through its regulatory powers. Moreover, broker-dealers must maintain certain basic information on their customers. It is, of course, entirely possible to trade through an offshore company, or a series of nominee accounts and shell companies, a strategy that can make the beneficial owner hard to determine. Still, the investigators could always detect the initial trade, even if they could not determine the beneficial owner. Any suspicious profitable trading through such accounts would be starkly visible. The investigators of the 9/11 trades never found any blind alleys caused by shell companies, offshore accounts, or anything else; they were able to investigate the suspicious trades they identified. Every suspicious trade was determined to be part of a legitimate trading strategy totally unrelated to the terrorist attacks.

    Many of the public reports concerning insider trading before 9/11 focused on the two airline companies most directly involved: UAL Corp., the parent company of United Airlines, and AMR Corp., the parent company of American Airlines. Specifically, many people have correctly pointed out that unusually high volumes of put options traded in UAL on September 6–7 and in AMR on September 10.169

    When the markets opened on September 17, AMR fell 40 percent and UAL fell 43 percent. The suspicious options trading before the attacks fueled speculation that al Qaeda had taken advantage of the U.S. markets to make massive profits from its murderous attacks. The allegations had appeal on their face—just as al Qaeda used our sophisticated transportation system to attack us, it appeared to have used our sophisticated markets to finance itself and provide money for more attacks. But we conclude that this scenario simply did not happen.

    Although this report will not discuss each of the trades that profited from the 9/11 attacks, some of the larger trades, particularly those cited in the media as troubling, are illustrative and typical both of the nature of the government investigation into the trades and of the innocent nature of the trading. The put trading in AMR and UAL is a case in point: it appeared that somebody made big money by betting UAL and AMR stock prices were going to collapse, yet closer inspection revealed that the transactions were part of an innocuous trading strategy.

    The UAL trading on September 6 is a good example. On that day alone, the UAL put option volume was much higher than any surrounding day and exceeded the call option volume by more than 20 times—highly suspicious numbers on their face.170 The SEC quickly discovered, however, that a single U.S. investment adviser had purchased 95 percent of the UAL put option volume for the day. The investment adviser certainly did not fit the profile of an al Qaeda operative: it was based in the United States, registered with the SEC, and managed several hedge funds with $5.3 billion under management. In interviews by the SEC, both the CEO of the adviser and the trader who executed the trade explained that they—and not any client—made the decision to buy the put as part of a trading strategy based on a bearish view of the airline industry. They held bearish views for a number of reasons, including recently released on-time departure figures, which suggested the airlines were carrying fewer passengers, and recently disclosed news by AMR reflecting poor business fundamentals. In pursuit of this strategy, the adviser sold short a number of airline shares between September 6 and September 10; its transactions included the fortunate purchase of UAL puts. The adviser, however, also bought 115,000 shares of AMR on September 10, believing that their price already reflected the recently released financial information and would not fall any further. Those shares dropped significantly when the markets reopened after the attacks. Looking at the totality of the adviser’s circumstances, as opposed to just the purchase of the puts, convinced the SEC that it had absolutely nothing to do with the attacks or al Qaeda. Still, the SEC referred the trade to the FBI, which also conducted its own investigation and reached the same conclusion.

    The AMR put trading on September 10 further reveals how trading that looks highly suspicious at first blush can prove innocuous. The put volume of AMR on September 10 was unusually high and actually exceeded the call volume by a ratio of 6:1—again, highly suspicious on its face. The SEC traced much of the surge in volume to a California investment advice newsletter, distributed by email and fax on Sunday, September 9, which advised its subscribers to purchase a particular type of AMR put options. The SEC interviewed 28 individuals who purchased these types of AMR puts on September 10, and found that 26 of them cited the newsletter as the reason for their transaction. Another 27 purchasers were listed as subscribers of the newsletter. The SEC interviewed the author of the newsletter, a U.S. citizen, who explained his investment strategy analysis, which had nothing to do with foreknowledge of 9/11. Other put option volume on September 10 was traced to similarly innocuous trades.

    Another good example concerns a suspicious UAL put trade on September 7, 2001. A single trader bought more than one-third of the total puts purchased that day, establishing a position that proved very profitable after 9/11. Moreover, it turns out that the same trader had a short position in UAL calls—another strategy that would pay off if the price of UAL dropped. Investigation, however, identified the purchaser as a well-established New York hedge fund with $2 billion under management. Setting aside the unlikelihood of al Qaeda having a relationship with a major New York hedge fund, these trades looked facially suspicious. But further examination showed the fund also owned 29,000 shares of UAL stock at the time—all part of a complex, computer-driven trading strategy. As a result of these transactions, the fund actually lost $85,000 in value when the market reopened. Had the hedge fund wanted to profit from the attacks, it would not have retained the UAL shares.

    These examples were typical. The SEC and the FBI investigated all of the put option purchases in UAL and AMR, drawing on multiple and redundant sources of information to ensure complete coverage. All profitable option trading was investigated and resolved. There was no evidence of illicit trading and no unexplained or mysterious trading. Moreover, there was no evidence that profits from any profitable options trading went uncollected.171

    The options trading in UAL and AMR was typical of the entire investigation. In all sectors and companies whose trades looked suspicious because of their timing and profitability, including short selling of UAL, AMR, and other airline stocks, close scrutiny revealed absolutely no evidence of foreknowledge. The pattern is repeated over and over. For example, the FBI investigated a trader who bought a substantial position in put options in AIG Insurance Co. shortly before 9/11. Viewed in isolation, the trade looked highly suspicious, especially when AIG stock plummeted after 9/11. The FBI found that the trade had been made by a fund manager to hedge a long position of 4.2 million shares in the AIG common stock. The fund manager owned a significant amount of AIG stock, but the fund had a very low tax basis in the stock (that is, it had been bought long ago and had appreciated significantly over time). Selling even some of it would have created a massive tax liability. Thus, the fund manager chose to hedge his position through a put option purchase. After 9/11, the fund profited substantially from its investment in puts. At the same time, however, it suffered a substantial loss on the common stock, and overall lost money as a result of the attacks.

    In sum, the investigation found absolutely no evidence that any trading occurred with foreknowledge of 9/11. The transparency of the U.S. securities markets almost ensures that any such trading would be detectable by investigators. Even if the use of some combination of offshore accounts, shell companies, and false identification obscured the identity of the traders themselves, the unexplained trade would stand out like a giant red flag. The absence of any such flags corroborates the conclusion that there is no evidence any such trading occurred. Indeed, the leaders of both the SEC and FBI investigations into pre-9/11 trading expressed great confidence in this conclusion.

    International Investigation

    There is also no evidence that any illicit trading occurred overseas. Through its Office of International Affairs, the SEC sought the assistance of numerous foreign countries with active securities markets. The FBI also engaged with foreign law enforcement officials about overseas trading. There are two issues to consider with respect to the international investigation: overseas trading in U.S. securities and trading of foreign securities in overseas markets.

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