Some Investors May Have Had Advance Knowledge of Hamas Attack and Raked in the Profits

A recently published study shows the profoundly disturbing possibility that some investors had advance knowledge of the October 7 Hamas attack on Israel and profited enormously from it.

The study, published Sunday in the SSRN journal by Robert J. Jackson, Jr. from the New York University School of Law and Joshua Mitts of Columbia Law School, finds traders who appear to have had advanced knowledge of the attack making billions of dollars.

"Days before the attack, traders appeared to anticipate the events to come," they wrote, citing short interest in the MSCI Israel Exchange Traded Fund (ETF) that "suddenly, and significantly, spiked" on Oct. 2 based on data from the Financial Industry Regulatory Authority (FINRA).

"And just before the attack, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically," they wrote in their 66-page report.

The researchers said short-selling, in which investors expect the share price to fall, allowing it to be bought back at a lower price at a profit, prior to Oct. 7 "exceeded the short-selling that occurred during numerous other periods of crisis."

That includes the recession following the financial crisis in 2008, the 2014 Israel-Gaza war, and the COVID-19 pandemic.

They wrote that for Leumi (LUMI.TA), Israel's largest bank, 4.43 million new shares sold short over the Sept. 14 to Oct. 5 period yielded profits of 3.2 billion shekels ($862 million) on that additional short-selling.

"Although we see no aggregate increase in shorting of Israeli companies on U.S. 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 said.

The professors came to a devastating conclusion.

"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."

Related: Israel Wants a Gaza 'Buffer Zone' to Prevent More Terror Attacks

While the professors do not speculate about who the investors might be, it's a foregone conclusion that they were either initiating trades for Hamas or were Hamas sympathizers.

"It is extremely unlikely that the volume of short selling on Oct. 2 occurred by random chance," the pair wrote.

The peak of the short selling came on Oct. 2, which was greater than 99% of the 3,570 trading days analyzed in the study, going back 15 years. 

We already have a good idea of the sophisticated engineering skills of Hamas in constructing their underground network of tunnels. The financial plan executed by the terrorists that brought them billions of dollars (on paper) shows a sophistication beyond anything previously believed.

A spokesman for the Israeli government claims that they were already looking into the same scenario of Hamas using the stock market to rake in money. It may be possible for the terrorists to be denied most of that money if Jerusalem freezes it.