#911Truth WTFact #6: Wall Street Knew Something
Did you miss the introduction to this year’s campaign?
Insider Trading via 911research.wtc7.net
Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market.
An extraordinary number of trades were betting that American Airlines stock price would fall.
The trades are called “puts” and they involved at least 450,000 shares of American. But what raised the red flag is more than 80 percent of the orders were “puts”, far outnumbering “call” options, those betting the stock would rise.
Sources say they have never seen that kind of imbalance before, reports CBS News Correspondent Sharyl Attkisson. Normally the numbers are fairly even.
After the terrorist attacks, American Airline stock price did fall obviously by 39 percent, and according to sources, that translated into well over $5 million total profit for the person or persons who bet the stock would fall.
At least one Wall Street firm reported their suspicions about this activity to the SEC shortly after the attack.
The same thing happened with United Airlines on the Chicago Board Options Exchange four days before the attack. An extremely unbalanced number of trades betting United’s stock price would fall — also transformed into huge profits when it did after the hijackings.
“We can directly work backwards from a trade on the floor of the Chicago Board Options Exchange. The trader is linked to a brokerage firm. The brokerage firm received the order to buy that ‘put’ option from either someone within a brokerage firm speculating, or from one of the customers,” said Randall Dodd of the Economic Strategy Institute.
U.S. investigators want to know whether Osama bin Laden was the ultimate “inside trader” — profiting from a tragedy he’s suspected of masterminding to finance his operation. Authorities are also investigating possibly suspicious trading in Germany, Switzerland, Italy and Japan.
On September 29, 2001, the San Francisco Chronicle pointed out:
“Usually, if someone has a windfall like that, you take the money and run,” said the source, who spoke on condition of anonymity. “Whoever did this thought the exchange would not be closed for four days.
“This smells real bad.”
There was an unusually large jump in purchases of put options on the stocks of UAL Corp. and AMR Corp. in the three business days before the attack on major options exchanges in the United States. On one day, UAL put option purchases were 25 times greater than the year-to-date average. In the month before the attacks, short sales jumped by 40 percent for UAL and 20 percent for American.
Spokesmen for British securities regulators and the AXA Group also confirmed yesterday that investigations are continuing.
The source familiar with the United trades identified Deutsche Banc Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of the options.
Last weekend, German central bank president Ernst Welteke said a study pointed to “terrorism insider trading” in those stocks.
Pre-9/11 Put Options on Companies Hurt by Attack Indicates Foreknowledge
Financial transactions in the days before the attack suggest that certain individuals used foreknowledge of the attack to reap huge profits. 1
The evidence of insider trading includes:
- Huge surges in purchases of put options on stocks of the two airlines used in the attack — United Airlines and American Airlines
- Surges in purchases of put options on stocks of reinsurance companies expected to pay out billions to cover losses from the attack — Munich Re and the AXA Group
- Surges in purchases of put options on stocks of financial services companies hurt by the attack — Merrill Lynch & Co., and Morgan Stanley
and Bank of America
- Huge surge in purchases of call options of stock of a weapons manufacturer expected to gain from the attack — Raytheon
- Huge surges in purchases of 5-Year US Treasury Notes
In each case, the anomalous purchases translated into large profits as soon as the stock market opened a week after the attack:
put options were used on stocks that would be hurt by the attack, and call options were used on stocks that would benefit.
Put and call options are contracts that allow their holders to sell and buy assets, respectively,
at specified prices by a certain date. Put options allow their holders to profit from declines in stock values because they allow stocks to be bought at market price and sold for the higher option price.
The ratio of the volume of put option contracts to call option contracts is called the put/call ratio.
The ratio is usually less than one, with a value of around 0.8 considered normal.2
American Airlines and United Airlines, and several insurance companies and banks posted huge losses in stock values when the markets opened on September 17. Put options — financial instruments which allow investors to profit from the decline in value of stocks — were purchased on the stocks of these companies in great volume in the week before the attack.
United Airlines and American Airlines
Two of the corporations most damaged by the attack were American Airlines (AMR), the operator of
Flight 11 and Flight 77, and United Airlines (UAL), the operator of Flight 175 and Flight 93. According to CBS News, in the week before the attack,
the put/call ratio for American Airlines was four. 3
The put/call ratio for United Airlines was 25 times above normal on September 6. 4
This graph shows a dramatic spike in pre-attack purchases of put options on the airlines used in the attack. (source: www.optionsclearing.com)
The spikes in put options occurred on days that were uneventful for the airlines and their stock prices.On Sept. 6-7, when there was no significant news or stock price movement involving United, the Chicago exchange handled 4,744 put options for UAL stock, compared with just 396 call options — essentially bets that the price will rise. On Sept. 10, an uneventful day for American, the volume was 748 calls and 4,516 puts, based on a check of option trading records.5
The Bloomberg News reported that put options on the airlines surged to the phenomenal high of 285 times their average.Over three days before terrorists flattened the World Trade Center and damaged the Pentagon, there was more than 25 times the previous daily average trading in a Morgan Stanley “put” option
that makes money when shares fall below $45. Trading in similar AMR and UAL put options,
which make money when their stocks fall below $30 apiece, surged to as much as 285 times the average trading up to that time. 6
When the market reopened after the attack, United Airlines stock fell 42 percent from $30.82 to $17.50 per share, and American Airlines stock fell 39 percent, from $29.70 to $18.00 per share. 7
Several companies in the reinsurance business were expected to suffer huge losses from the attack:
Munich Re of Germany and Swiss Re of Switzerland — the world’s two biggest reinsurers, and the AXA Group of France. In September, 2001, the San Francisco Chronicle estimated liabilities of $1.5 billion for Munich Re and $0.55 bilion for the AXA Group and telegraph.co.uk estimated liabilities of
£1.2 billion for Munich Re and £0.83 billion for Swiss Re.8 9
Trading in shares of Munich Re was almost double its normal level on September 6, and 7,
and trading in shares of Swiss Re was more than double its normal level on September 7.10
Financial Services Companies
Merrill Lynch and Morgan Stanley
Morgan Stanley Dean Witter & Co. and Merrill Lynch & Co. were both headquartered in lower Manhattan at the time of the attack. Morgan Stanley occupied 22 floors of the North Tower and Merrill Lynch had headquarters near the Twin Towers.
Morgan Stanley, which saw an average of 27 put options on its stock bought per day before September 6,
saw 2,157 put options bought in the three trading days before the attack. Merrill Lynch, which saw an average of 252 put options on its stock bought per day before September 5, saw 12,215 put options bought in the four trading days before the attack. Morgan Stanley’s stock dropped 13% and
Merrill Lynch’s stock dropped 11.5% when the market reopened. 11
Bank of America showed a fivefold increase in put option trading on the Thursday and Friday before the attack.A Bank of America option that would profit if the No. 3 U.S. bank’s stock fell below $60 a share had more than 5,900 contracts traded on the Thursday and Friday before the Sept. 11 assaults, almost five times the previous average trading, according to Bloomberg data. The bank’s shares fell 11.5 percent to $51 in the first week after trading resumed on Sept. 17. 12
While most companies would see their stock valuations decline in the wake of the attack, those in the business of supplying the military would see dramatic increases, reflecting the new business they were poised to receive.
Raytheon, maker of Patriot and Tomahawk missiles, saw its stock soar immediately after the attack.
Purchases of call options on Raytheon stock increased sixfold on the day before the attack.A Raytheon option that makes money if shares are more than $25 each had 232 options contracts traded on the day before the attacks, almost six times the total number of trades that had occurred before that day. A contract represents options on 100 shares. Raytheon shares soared almost 37 percent to $34.04 during the first week of post-attack U.S. trading. 13
Raytheon has been fined millions of dollars inflating the costs of equipment it sells the US military.
Raytheon has a secretive subsidiary, E-Systems, whose clients have included the CIA and NSA. 14
US Treasury Notes
Five-year US Treasury notes were purchased in abnormally high volumes before the attack,
and their buyers were rewarded with sharp increases in their value following the attack.The Wall Street Journal reported on October 2 that the ongoing investigation by the SEC into suspicious stock trades had been joined by a Secret Service probe into an unusually high volume of five-year US Treasury note purchases prior to the attacks. The Treasury note transactions included a single $5 billion trade. As the Journal explained: “Five-year Treasury notes are among the best investments in the event of a world crisis, especially one that hits the US. The notes are prized for their safety and their backing by the US government, and usually rally when investors flee riskier investments, such as stocks.”
The value of these notes, the Journal pointed out, has risen sharply since the events of September 11.
The SEC’s Investigation
Shortly after the attack the SEC circulated a list of stocks to securities firms around the world seeking information. 16
widely circulated article states that the stocks flagged by the SEC included those of the following corporations:
American Airlines, United Airlines, Continental Airlines, Northwest Airlines, Southwest Airlines, US Airways airlines, Martin, Boeing, Lockheed Martin Corp., AIG, American Express Corp, American International Group, AMR Corporation, AXA SA, Bank of America Corp, Bank of New York Corp, Bank One Corp,
Cigna Group, CNA Financial, Carnival Corp, Chubb Group, John Hancock Financial Services, Hercules Inc.,
L-3 Communications Holdings, Inc., LTV Corporation, Marsh & McLennan Cos. Inc., MetLife, Progressive Corp., General Motors, Raytheon, W.R. Grace, Royal Caribbean Cruises, Ltd., Lone Star Technologies, American Express, the Citigroup Inc., Royal & Sun Alliance, Lehman Brothers Holdings, Inc., Vornado Reality Trust, Morgan Stanley, Dean Witter & Co., XL Capital Ltd., and Bear Stearns.
An October 19 article in the San Francisco Chronicle reported that the SEC, after a period of silence, had undertaken the unprecedented action of deputizing hundreds of private officials in its investigation:The proposed system, which would go into effect immediately, effectively deputizes hundreds, if not thousands, of key players in the private sector.
In a two-page statement issued to “all securities-related entities” nationwide, the SEC asked companies to designate senior personnel who appreciate “the sensitive nature” of the case and can be relied
upon to “exercise appropriate discretion” as “point” people linking government investigators and the industry.17
Michael Ruppert, a former LAPD officer, explains the consequences of this action:What happens when you deputize someone in a national security or criminal investigation is that you make it illegal for them to disclose publicly what they know. Smart move. In effect, they become government agents and are controlled by government regulations rather than their own conscience. In fact, they can be thrown in jail without a hearing if they talk publicly. I have seen this implied threat time and again with federal investigations, intelligence agents, and even members of the United States Congress
who are bound so tightly by secrecy oaths and agreements that they are not even able to disclose criminal activities inside the government for fear of incarceration. 18
Interpreting and Reinterpreting the Data
An analysis of the press reports on the subject of apparent insider trading related to the attack shows a trend, with early reports highlighting the anomalies, and later reports excusing them.
In his book Crossing the Rubicon Michael C. Ruppert illustrates this point by first excerpting
a number of reports published shortly after the attack:
- A jump in UAL (United Airlines) put options 90 times (not 90 percent) above normal between September 6 and September 10, and 285 times higher than average on the Thursday before the attack.
— CBS News, September 26
- A jump in American Airlines put options 60 times (not 60 percent) above normal on the day before the attacks.
— CBS News, September 26
- No similar trading occurred on any other airlines — Bloomberg Business Report, the Institute for Counterterrorism (ICT), Herzliyya, Israel [citing data from the CBOE]3
- Morgan Stanley saw, between September 7 and September 10, an increase of 27 times (not 27 percent) in the purchase of put options on its shares. 4
- Merrill-Lynch saw a jump of more than 12 times the normal level of put options in the four trading days before the attacks. 5
3. “Mechanics of Possible Bin Laden Insider Trading Scam,” Herzlyya International Policy Institute for Counter Terrorism (ICT), September 22, 2001. Michael C. Ruppert, “The Case for Bush Administration Advance Knowledge of 9-11 Attacks,” From the Wilderness April 22, 2002. Posted at Centre for Research and Globalization www.globalresearch.ca/articles/RUP203A.html.
4. ICT, op. cit, citing data from the Chicago Board of Options Exchange (CBOE). […] “Terrorists trained at CBPE.” Chicago Sun-Times, September 20, 2001, www.suntimes.com/terror/stories/cst-nws-trade20.html>.
“Probe of options trading link to attacks confirmed,” […]
Chicago Sun-Times, September 21, 2001, <www.suntimes.com/terror/stories/cst-fin-trade21.html>.
5. ICT, op. cit.19
Ruppert then illustrates an apparent attempt to bury the story by explaining it away as nothing unusual.
A September 30 New York Times article claims that “benign explanations are turning up” in the SEC’s investigation. 20 The article blames the activity in put options, which it doesn’t quantify, on “market pessimism,” but fails to explain why the price of the stocks in the airlines doesn’t reflect the same market pessimism.
The fact that $2.5 million of the put options remained unclaimed is not explained at all by market pessimism, and is evidence that the put option purchasers were part of a criminal conspiracy.21
1. Insider Trading Apparently Based on Foreknowledge of the 9/11 Attacks, London Times, 9/18/01[cached]
Put/Call Ratio, StreetAuthority.com,
Profiting From Disaster?, CBSNews.com, 9/19/01[cached]
4. Prices, Probabilities and Predictions, OR/MS Today,
5. Exchange examines odd jump, Associated Press, 9/18/01[cached]
6. SEC asks Goldman, Lehman for data, Bloomberg News, 9/20/01[cached]
7. Black Tuesday: The World’s Largest Insider Trading Scam?, ict.org.il, September 19, 2001[cached]
8. Suspicious profits sit uncollected Airline investors seem to be lying low, San Francisco Chronicle, 9/29/01
9. Profits of doom, telegraph.co.uk, 9/23/01 [cached]
10. Profits of doom …, 9/23/01
11. Black Tuesday …, 9/19/01
12. Bank of America among 38 stocks in SEC’s attack probe, Bloomberg News, 10/3/01
13. Bank of America …, 10/3/01
14. Raytheon, corpwatch.org,
15. Suspicious trading points to advance knowledge by big investors of September 11 attacks, wsws.org, 10/5/01 [cached]
16. Bank of America …, 10/3/01
17. SEC wants data-sharing system Network of brokerages would help trace trades by terrorists, San Francisco Chronicle, 9/19/01 [cached]
18. Crossing the Rubicon, , page 243
19. Crossing the Rubicon, , page 238-239,634
20. Whether advance knowledge of U.S. attacks was used for profit, New York Times, 9/30/01
21. Suspicious profits …, 9/29/01
Web archive at wanttoknow.info
By Margaret Cronin Fisk
National Law Journal
September 17, 2001
Additional details emerged Friday about the effect of the collapse of 7 World Trade Center on investigations being conducted by the New York offices of the Securities and Exchange Commission and the Equal Employment Opportunity Commission, both of which were housed in the building.
The SEC has not quantified the number of active cases in which substantial files were destroyed. Reuters news service and the Los Angeles Times published reports estimating them at 3,000 to 4,000. They include the agency’s major inquiry into the manner in which investment banks divvied up hot shares of initial public offerings during the high-tech boom.
The EEOC said documents from about 45 active cases were missing and could not be easily retrieved from any backup system. One of these cases was a sexual harassment charge filed on Sept. 10 against Morgan Stanley, one of the prime corporate victims of the World Trade Center disaster.
A statement from the commission said that “we are confident that we will not lose any significant investigation or case as a result of the loss of our building in New York. No one whom we have sued or whose conduct we have been investigating should doubt our resolve to continue our pursuit of justice in every such matters.”
But the short-term problems will be immense, said Gregory Joseph of New York’s Law Offices of Gregory Joseph.
“Court papers can largely be reconstituted, but work product has to be reconstructed,” he said. “This will cause delays in court and will require significant reduplication of effort.” Some data, he added, “won’t be recreatable.”
“Ongoing investigations at the New York SEC will be dramatically affected because so much of their work is paper-intensive,” said Max Berger of New York’s Bernstein Litowitz Berger & Grossmann. “This is a disaster for these cases.”
“The SEC will have some difficulty, but the bounce-back will come relatively easily,” predicts Harvey Goldschmid, Dwight professor of law at Columbia University and former general counsel of the SEC. “It will throw things off for a period of time, but most of what’s important can be regained. They will have to reconstruct these documents. But most of this was backed up or in Washington. They’ve lost some transcripts but even they’re available.”
But let’s get back to the subject of destruction. On September 11, not only human life, aircraft and buildings were destroyed in New York City, but also data on computers and in archives. For example, several federal agencies occupied space in Building 7 of the World Trade Center, including the Securities and Exchange Commission on floors 11 to 13.
Those and other data could have given information about the alleged 9/11 insider trading (though it seems to be very unlikely that no backup existed elsewhere independent of the local computer systems). In fact, some technology companies were commissioned to recover damaged hard disks, which had been recovered from the debris and dust of Ground Zero.
One of these companies was the English company group Convar, more precisely: their data rescue center in the German city Pirmasens. Erik Kirschbaum from the news agency Reuters reported in December 2001 that Convar had at that time successfully restored information from 32 computers, supporting “suspicions that some of the 911 transactions were illegal”.
‘The suspicion is that inside information about the attack was used to send financial transaction commands and authorizations in the belief that amid all the chaos the criminals would have, at the very least, a good head start,’ says Convar director Peter Henschel.”  Convar received the costly orders – according to Kirschbaum´s report the companies had to pay between $20,000 and $30,000 per rescued computer – in particular from credit card companies, because: “There was a sharp rise in credit card transactions moving through some computer systems at the WTC shortly before the planes hit the twin towers. This could be a criminal enterprise – in which case, did they get advance warning? Or was it only a coincidence that more than $100 million was rushed through the computers as the disaster unfolded?” 
The companies for which Convar was active cooperated with the FBI. If the data were reconstructed they should have been passed on to the FBI, and the FBI, according to its statutory mandate, should have initiated further investigation based on the data to find out who carried out these transactions. Henschel was optimistic at the time that the sources for the transactions would come to light.
Richard Wagner, a Convar employee, told Kirschbaum that “illegal transfers of more than $100 million might have been made immediately before and during the disaster. ‘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,’ he says. ‘They thought that the records of their transactions could not be traced after the main frames were destroyed’.” 
Wagner’s observation that there had been “illegal financial transactions shortly before and during the WTC disaster” matches an observation which Ruppert describes in Crossing the Rubicon. Ruppert was contacted by an employee of Deutsche Bank, who survived the WTC disaster by leaving the scene when the second aircraft had hit its target.
According to the employee, about five minutes before the attack the entire Deutsche Bank computer system had been taken over by something external that no one in the office recognized and every file was downloaded at lightning speed to an unknown location. The employee, afraid for his life, lost many of his friends on September 11, and he was well aware of the role which the Deutsche Bank subsidiary Alex Brown had played in insider trading. 
I was curious and wanted more information from Convar regarding their work on the WTC-computer hard drives, but also about the statements made by Peter Henschel and Richard Wagner. Thus, I contacted the agency which represents Convar for press matters, with a written request. But their agency “ars publicandi” informed me swiftly:
Due to time constraints, we can currently offer you neither information nor anyone on the part of our client to talk to regarding this requested topic.
I also approached KrollOntrack, a very interesting competitor of Convar in writing. Ontrack Data Recovery, which also has subsidiaries in Germany, was purchased in 2002 by Kroll Inc – “one of the nation’s most powerful private investigative and security firms, which has long-standing involvement with executive protection US government officials including the president. This would require close liaison with the Secret Service.” 
At the time of the 9/11 attacks, a certain Jerome Hauer was one of the managing directors at Kroll Inc. He had previously established the crisis center for the mayor of New York City as director of the Office of Emergency Management (OEM), which occupied office space on the 23rd floor of the WTC Building 7. Hauer helped former FBI agent John O’Neill to get the post of the head of Security Affairs at the WTC, and spent the night of September 11 with O’Neill in New York before the latter lost his life on September 11 in the WTC. Hauer was most likely involved in the planning of “Tripod II”, the war game exercise at the port of New York City. 
Therefore, I found it appealing to uncover some more details of this aspect, or, more accurately to find out if Ontrack or KrollOntrack had received an order in 2001 or after to rescue computer hard drives from the WTC. The answer I received from KrollOntrack said:
Kroll Ontrack was not at the site of the data recovery – the devices at the Twin Towers have been completely destroyed or vaporized. The firm Kroll was, however, at that time active in the field of computer-forensic investigations, securing devices in the surrounding buildings.
In essence, these two inquiries did not help me at all. If anything, a further question arose: why did KrollOntrack send me a response, where it was really obvious that the content did not match the facts? After all, I had written in my inquiry that Convar had received orders to restore damaged computer hard drives from the World Trade Center.
I sent a new inquiry, attaching a link for Erik Kirschbaum’s Reuters article and additional cinematic reports on Convar’s which showed that some of the WTC disks had not been “completely destroyed or vaporized”. I stated to KrollOntrack: “Your answer does not seem to match the facts, when it comes to ‘completely destroyed or vaporized’. Will you still stick to your answer?”
KrollOntrack then replied that their previously given assessment constituted “not a statement, but an opinion”.
I do not find this assessment worthless, because it is in line with the knowledge of the general public and can easily be refuted in argumentum in contrario by Convar´s activities.
One film report to which I referred to in my second inquiry to KrollOntrack originated from the German television journal Heute-Journal broadcast on March 11, 2002, on ZDF, and the other from the Dutch TV documentary Zembla, broadcast on September 10, 2006.
The ZDF report showed that Convar received the WTC disks from the US Department of Defense and that Convar had managed until March 2002 to recover more than 400 hard drives. It also reported that the private companies that employed Convar had paid between $25,000 and $50,000 per hard drive. In the TV documentary Zembla, Convar essentially maintained its position as it had been reported by Erik Kirschbaum in 2001.
Obviously, in connection with 9/11 there has not only been insider trading via put options, but there is additional evidence that there have been illegal financial transactions via credit cards through which more than 100 million US dollars were removed from the WTC computer systems.
Those occurred shortly before and during the WTC disaster. It remains unclear what the FBI did later on with the data recovered by Convar. On the other hand, it may have been not very much, as can be seen from a memorandum from the 9/11 Commission, which was released in May 2009.
The 9/11 Commission asked the FBI about the use of credit cards for insider dealing. On the basis of the information provided by the FBI, 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 or the alleged scheme” – but above all “everything at the WTC was pulverized to near powder, making it extremely unlikely that any hard-drives survived”. 
The activities of Convar, however, prove the exact opposite.
But it gets even better. According to Zembla, the FBI was directly involved with the data rescue efforts of Convar. And on top of it, the broadcast of Heute-Journal reported that Convar worked in that “highly sensitive” matter with several federal agencies of the United States government.
On October 19, 2001, the Chronicle wrote:
On Oct. 2, Canadian securities officials confirmed that the SEC privately had asked North American investment firms to review their records for evidence of trading activity in the shares of 38 companies, suggesting that some buyers and sellers might have had advance knowledge of the attacks.