Hamas-linked financiers made hundreds of millions of dollars of profits by shorting Israeli stocks before the October 7 massacre, two analysts say.
One unidentified trader ‘shorted’ 4.43 million shares in Israel’s largest bank, Leumi, between September 15 and October 5 – meaning they gambled that the price of Leumi’s shares would fall.
After the October 7 attack, Leumi’s share price did indeed plummet as its operations were paralyzed, earning a $900 million profit for the trader, who is believed to have links to Hamas.
The trade and others were unearthed by Robert J. Jackson, Jr, from New York University School of Law, and Joshua Mitts of Columbia Law School.
On Monday they published a report into their findings titled: ‘Trading on Terror?’
They’ve speculated that the cash may have been funneled back into Hamas’ operations. Jackson and Mitts did not identify who was behind the trades, but noted they were highly unusual.
‘Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in gaps in U.S. and international enforcement of legal prohibitions on informed trading,’ they write.
Leumi bank, the largest in Israel, was shorted by a trader from September 15-October 5, earning the trader $900 million
Joshua Mitts (left), from Columbia Law School, and Robert J. Jackson, Jr, from New York University School of Law (right), on Monday published their analysis of the trades
‘We contribute to the growing literature on trading related to geopolitical events and offer suggestions for policymakers concerned about profitable trading on the basis of information about coming military conflict.’
And another trader made a remarkable 227,000 short transactions on October 2 against the EIS – the Enterprise Investment Scheme (EIS), a security traded on the New York Stock Exchange.
The EIS gives investors exposure to Israeli exchange-traded funds.
The value of EIS fell by 7.1 percent on October 11 – the first day the U.S. market was open after the terror attack – and within the first month lost 17.5 percent of its value, meaning that that one trader profited handsomely from the October 2 trades.
Revelers flee from the Supernova peace festival during the October 7 attacks, which left more than 1,200 Israelis dead
Hamas terrorists are seen on October 7 taking hostages from communities near Gaza
The terrorists are seen having burst through the Gaza border fence on October 7
Abandoned and torched vehicles at the site of the October 7 attack on the Supernova desert music festival in southern Israel
Jackson and Mitts concluded: ‘It is extremely unlikely that the volume of short selling on October 2 occurred by random chance.’
The pair said the trades raised suspicion that they could have been carried out by someone with insider knowledge of the Hamas attack.
‘Although we see no aggregate increase in shorting of Israeli companies on US exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks,’ they wrote.
Hamas, which since 1997 has been proscribed as a terrorist organization by the United States, cannot carry out transactions on the open market.
Any Hamas figures who tried to do so risk having their assets frozen by the U.S. Treasury.
But the group has taken advantage of innovative financing systems, such as cryptocurrency.
A Wall Street Journal report found that, between August 2021 and June 2023, three terror groups – Hamas, Palestinian Islamic Jihad and its Lebanese ally, Hezbollah – collectively received over $134 million in crypto.
Hamas received some $41 million in digital currency over the nearly two-year period, the Journal reported.
Islamic Jihad received $93 million.