Research conducted at New York and Columbia Universities said that some investors in the Tel Aviv Stock Exchange “may have had prior knowledge” of the “Al-Aqsa Flood” operation carried out by Hamas on October 7 and “benefited from it.”

The research, conducted by law professors at New York and Columbia University, Robert Jackson Jr. and Joshua Metts, and titled “Trafficking in Terrorism?”, which has not been peer-reviewed, stated that there was a “large and unusual” rise five days before the attack in Short selling in the most popular MSCI fund in Israel.

The research revealed that sales “far exceeded” those that occurred during the Corona pandemic, and the war between Israel and Gaza in 2014 and 2008, and continued: “Our findings indicate that investors benefited from these tragic events.”

The research found that on October 2, just 5 days before the attack, “short selling represented nearly 100% of MSCI fund OTC trading volume,” and “days before the attack, investors appeared to be anticipating the coming events.” 

The researchers stressed that their findings are “preliminary” and that they are unable to link specific traders to these transactions, as well as identify their underlying sources of information. However, they stated that US regulatory agencies, including the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA), has access to non-public data that can help investigators understand why and how markets behaved before October 7.

The research said that in the days leading up to the attack, bets on Israeli securities traded on the Tel Aviv Stock Exchange “increased dramatically.” For example, between September 14 and October 5, 4.4 million new shares were sold short in Bank Leumi, the research said. One of the largest banks in Israel, the bank's share prices fell by 23% between October 4 and 23.

However, there was no corresponding increase in short selling in Israeli companies traded on US exchanges, although the researchers noted that this may be because some Israeli defense companies would benefit from higher demand in the wake of the attacks and some have a large international presence.

The research found an increase in short-term contracts on shares of Israeli companies traded on the US stock exchange, and the researchers said that this was linked to many trades, “suggesting that a small number of actors may have been behind these trades.”

The research found that the "significant" increase in short selling on the Tel Aviv Stock Exchange before the October 7 attack did not exist before the decline in the market that occurred in the wake of the judiciary reform law in July that led to protests.

“Taken together, our evidence is consistent with some well-informed investors anticipating and benefiting from the Hamas attack,” the researchers wrote.

The Israeli regulatory authority told Reuters: “The matter is known to the authority and is subject to investigation by all parties concerned.”

Source: Sama news