Investigations in Israel - Suspicious short selling: Have investors enriched themselves from Hamas terror?
Some investors have apparently profited massively from the attack on Israel by the radical Islamic terrorist group Hamas at the beginning of October. This is the result of a report by two US researchers. Investigations by law professors Robert Jackson Jr. from New York University and Joshua Mitts from Columbia University have shown that there was a suspiciously high number of short sales of shares in Israeli companies in the run-up to the attacks.
Short selling is when investors bet on falling share prices. This involves selling previously borrowed shares with the intention of buying them back at a lower price at a later date. The difference is retained as profit. If investors can assume a very high probability of falling share prices - for example due to insider information - short selling is particularly lucrative.
Some investors may have taken advantage of this in the days leading up to the Hamas attack on Israel, as the two US researchers write. "Our results suggest that traders who were aware of the impending attacks profited from these tragic events," they state in their report.
Speculating on Hamas terror? Suspicious movements in the MSCI Israel ETF
Jackson Jr. and Mitts base their suspicions on trading movements in the MSCI Israel ETF. The index fund contains shares in more than 100 Israeli companies, such as Bank Leumi and the website construction kit operator Wix. Short selling on the ETF "suddenly and significantly skyrocketed" on October 2, according to the report. Between mid-September and the beginning of October alone, one company sold more than four million shares short, which ultimately led to profits "in the millions". The researchers refer to data from the US securities regulator Finra.
In addition, the total volume of short selling exceeded that of past crises, such as the Israel-Gaza war in 2014 or during the coronavirus pandemic. A further indication that some investors may have anticipated the events.
However, it is unclear whether these were also members of the Hamas terrorist group itself. According to the Reuters news agency, Israeli authorities are now investigating the report.
Capital.de.
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Source: www.stern.de
