Pre-9-11 insider trading documented - Just for the record

[Jeannon Kralj]

This was a comment found on recent Timothy Kelly interview of James Perloff and his new 9-11 theory and upcoming book on the subject.

...http://www.youtube.com/watch?v=cV1Y44NsfM8&t=3s...

 

 

 

Oceanus Procellarum

12 hours ago

[•••] The summary of FBI investigations released by the 9/11 Commission also described how the Commission questioned the FBI about damaged computer hard drives that might have been recovered from the WTC.  This questioning was the result of “press reports [contending] that large volumes of suspicious transactions flowed through the computers housed in the WTC on the morning of 9/11 as part of some illicit but ill-defined effort to profit from the attacks.”[32] The Commission came to the conclusion that no such activity occurred because “the assembled agents expressed no knowledge of the reported hard-drive recovery effort” and “everything at the WTC was pulverized to near powder, making it extremely unlikely that any hard-drives survived.”

 

The truth, however, is that many such hard-drives were recovered from the WTC and were sent to specialist companies to be cleaned and have data recovered.  A German company named Convar did a good deal of the recovery work.

 

In December 2001, Reuters reported that “Convar has recovered information from 32 computers that support assumptions of dirty doomsday dealings.” Richard Wagner, a data retrieval expert at Convar, testified that “There is a suspicion that some people had advance knowledge of the approximate time of the plane crashes in order to move out amounts exceeding $100 million.  They thought that the records of their transactions could not be traced after the main frames were destroyed.”  Director of Convar, Peter Henschel, said that it was “not only the volume, but the size of the transactions [that] was far higher than usual for a day like that.”[33]

 

By late December 2001, Convar had completed processing 39 out of 81 drives, and expected to receive 20 more WTC hard drives the next month.  Obviously, the 911 Commission memorandum drafted in August 2003 was not particularly reliable considering it reported that the FBI and the 911 Commission had no knowledge of any of this.

 

The trading of Treasury bonds just before 9/11 was also flagged as being suspicious.  Reporters from The Wall street Journal wrote that the “U.S. Secret Service contacted a number of bond traders regarding large purchases of five-year Treasury notes before the attacks, according to people familiar with the probe. The investigators, acting on a tip from traders, are examining whether terrorists, or people affiliated with terrorist organizations, bought five-year notes, including a single $5 billion trade.”[18]

 

 German central bank president, Ernst Welteke, said his bank conducted a study that strongly indicated “terrorism insider trading” associated with 9/11.  He stated that his researchers had found “almost irrefutable proof of insider trading.”[8] Welteke suggested that the insider trading occurred not only in shares of companies affected by the attacks, such as airlines and insurance companies, but also in gold and oil. [9]

 

The extent of the 9/11-related informed trading was unprecedented.  An ABC News Consultant, Jonathan Winer, said, “it’s absolutely unprecedented to see cases of insider trading covering the entire world from Japan to the US to North America to Europe.”[10]

 

By October 2001, the Chicago Board Options Exchange (CBOE) and the four other options exchanges in the US had joined forces with the FBI and the Securities and Exchange Commission (SEC) to investigate a list of 38 stocks, as well as multiple options  and Treasury bonds, that were flagged in relation to potential informed trades.  SEC Chairman Harvey Pitt gave testimony to the House Financial Services Committee at the time, saying, “We will do everything in our power to track those people down and bring them to justice.”[11]

 

Mary Bender, chief regulatory officer at the CBOE, stated “We’ve never really had anything like this, [the option exchanges are] using the same investigative tools as we would in an insider-trading case. The point is to find people who are connected to these heinous crimes.”

 

The people ultimately found included an unnamed customer of Deutsche Bank Alex. Brown (DBAB).  This involved a trade on United Airlines (UAL) stock consisting of a 2,500-contract order that was, for some reason, split into chunks of 500 contracts each and then directed to multiple exchanges around the country simultaneously.[12] When the 9/11 Commission report pointed to a “single U.S.-based institutional investor with no conceivable ties to al Qaeda,” it was referring to either DBAB or its customer in that questionable trade.

 

Michael Ruppert has since written about DBAB, noting that the company had previously been a financier of The Carlyle Group and also of Brown Brothers Harriman, both of which are companies closely related to the Bush family.  Ruppert also noted that Alex. Brown, the company purchased by Deutsche Bank to become DBAB, was managed by A.B. (Buzzy) Krongard, who left the firm in 1998 to join the CIA as counsel to director George Tenet.[13] Krongard had been a consultant to CIA director James Woolsey in the mid 1990s and, on September 11th, he was the Executive Director of the CIA, the third highest position in the agency.

 

 

In 2002, investigator Kyle Hence wrote about the stocks involved in the SEC’s target list.  Those that had the highest examples of trade volume over the average were UAL [285 times over average], Marsh & McLennan (Marsh) [93 times over average], American Airlines (AMR) [60 times over average], and Citigroup [45 times over average].[14] Other stocks flagged included financial firms, defense-related companies, and the reinsurance firms Munich Re, Swiss Re and the AXA Group.  Put options for these reinsurance firms, or bets that the stock would drop, were placed at double the normal levels in the few days before the attacks.  Regulators were concerned about “large block trades” on these stocks because the three firms were liable for billions in insurance payouts due to the damage inflicted on 9/11.[15]

 

The four highest-volume suspect stocks — UAL, Marsh, AMR and Citigroup — were closely linked to the attacks of 9/11.  The two airline companies each had two planes hijacked and destroyed.  Marsh was located in the exact 8 floors out of 110 in the north tower of the WTC where Flight 11 impacted and the fires occurred.  Citigroup was the parent of Travelers Insurance, which was expected to see $500 million in claims, and also Salomon Smith Barney, which occupied all but ten floors in World Trade Center (WTC) building 7.  Oddly enough, Salomon Smith Barney had both Donald Rumsfeld and Dick Cheney on its advisory board until January 2001.

 

Marsh occupied a number of floors in the south tower as well.  This is where the office of Marsh executive, L. Paul Bremer, was located.  Bremer was a former managing director at Kissinger Associates and had just completed leading a national terrorism commission in 2000.  The San Francisco Chronicle noted that Bremer was a source of early claims that rich Arabs were financing Osama bin Laden’s terrorist network.  In an article on the 9/11 informed trades, the Chronicle reported that “The former chairman of the State Department’s National Commission on Terrorism, L. Paul Bremer, said he obtained classified government analyses early last year of bin Laden’s finances confirming the assistance of affluent Middle Easterners.”[16]

 

On the day of 9/11, Bremer was interviewed by NBC News and stated that he believed Osama bin Laden was responsible and that possibly Iraq and Iran were involved too, and he called for the most severe military response possible.  For unknown reasons, Google removed the interview video from its servers three times, and blocked it once.[17]

 

In 2006, a professor of Finance from the University of Illinois named Allen Poteshman published an analysis of the airline stock option trades preceding the attacks.  This study came to the conclusion that an indicator of long put volume was “unusually high which is consistent with informed investors having traded in the option market in advance of the attacks.”[34] Long puts are bets that a stock or option will fall in price.

 

The unusually high volume of long puts, purchased on UAL and AMR stock before these stocks declined dramatically due to the 9/11 attacks, are evidence that the traders knew that the stocks would decline.  Using statistical techniques to evaluate conditional and unconditional distributions of historical stock option activity, Professor Poteshman showed that the data indicate that informed trading did occur.

 

In January 2010, a team of financial experts from Switzerland published evidence for at least thirteen informed trades in which the investors appeared to have had foreknowledge of the attacks.  This study focused again on a limited number of companies but, of those, the informed trades centered on five airline companies and four financial companies.  The airline companies were American Airlines, United Airlines and Boeing.  Three of the financial companies involved were located in the WTC towers and the fourth was Citigroup, which stood to lose doubly as the parent of both Travelers Insurance and the WTC 7 tenant, Salomon Smith Barney.[35]

 

More recently, in April 2010, an international team of experts examined trading activities of options on the Standard & Poors 500 index, as well as a volatility index of the CBOE called VIX.  These researchers showed that there was a significant abnormal increase in trading volume in the option market just before the 9/11 attacks, and they demonstrated that this was in contrast to the absence of abnormal trading volume over periods long before the attacks.  The study also showed that the relevant abnormal increase in trading volume was not simply due to a declining market.[36] Their findings were “consistent with insiders anticipating the 9-11 attacks.” [•••]