The results of a recent academic study are startling and controversial, to say the least. The precarious Israeli stock market activity observed in the days leading up to Operation Al-Aqsa Flood on October 7 suggests that a specific, nameless entity possessed knowledge of the impending assault and exploited the ensuing hysteria for personal gain.
The paper, authored by Robert J. Jackson Jr. and Joshua Mitts of New York University School of Law, concludes that unidentified individuals were cognizant of the impending operation and intended to illicitly profit, as evidenced by a “significant spike” in short selling of listed Israeli companies. By short selling, or shorting, investors wager that a particular stock will underperform and profit if their prediction is accurate.
Contrary to conventional trading, shorting is an exceedingly uncommon practice, and justifiably so. Numerous investment advisors caution against the practice under all circumstances, as breaches of projected poor performance can result in enormous losses. Remarkably, the researchers discovered that the volume of short selling on Israeli companies in the days leading up to October 7 “far exceeded short selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic.”
Now, Israeli authorities are investigating the allegations made by the U.S. researchers.
As per Reuters:
Research by law professors Robert Jackson Jr from New York University and Joshua Mitts of Columbia University found significant short-selling of shares leading up to the attacks, which triggered a war nearly two months old.
“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 TASE subsequently directed Reuters to the Israel Securities Authority, which issued the following statement: “The matter is known to the authority and is under investigation by all the relevant parties.”
The securities regulator’s spokesperson refrained from providing further details, and the Israeli police did not respond promptly either.
They wrote that Leumi (LUMI.TA), the largest bank in Israel, generated profits of $3.2 billion shekels ($862 million) from the additional short-selling of 4.43 million new shares sold short between September 14 and October 5.
“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.
“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.”
The academics concluded: “Our evidence is consistent with informed traders anticipating and profiting from the Hamas attack.”
Aside from concerns regarding the paper’s potential to skew profit totals, this finding is exceedingly persuasive. A multitude of datasets examined extensively demonstrate that there was, in fact, a “significant spike” in short selling immediately preceding Operation Al-Aqsa Flood – and one that was extremely dubious, to say the least.
Prior to the attack, the shorting of dozens of Israeli companies listed on the Tel Aviv stock exchange “significantly increased.” From September 14 to October 5, 4.43 million new shares were shorted on a single company. Additionally, just prior to the attacks, there was an “abnormal and sudden increase” in U.S. exchanges in the volume of extremely risky short-dated options placed on Israeli equities. These options expired almost immediately after the attack began.
In a similar vein, the shorting of the MSCI Israel Exchange Traded Fund (ETF), which is a passive investment vehicle that mirrors the overall performance of the Israeli stock exchange, “suddenly, and significantly, spiked.” on October 2. In the 3,570 trading days preceding Operation Al-Aqsa Flood, this was the 30th-highest daily shorting volume ever witnessed by the ETF, according to the authors. In other terms, it was one of the largest wagers placed since 2009 on the underperformance of the Israeli stock exchange.
Israeli stock shorting at the onset of the COVID-19 pandemic, which momentarily precipitated one of the largest global stock market catastrophes in history, was “significantly” dwarfed by this shorting. A “largest intraday trading decline ever recorded” occurred in March 2020, when the Dow Jones Industrial Average plummeted 2000 points, evaporating trillions of dollars from the global economy.
The authors’ conclusion is unsurprising.
“It is extremely unlikely that the volume of short selling on October 2nd occurred by random chance.”
The identification of “similar patterns” in the trading of the Israeli ETF in April 2023, precisely when Hamas was reportedly preparing to launch a similar attack, is an additional compelling finding. The strike, which had been scheduled to closely mirror the events of October, was canceled when Tel Aviv publicly issued a national alert level in response to Israeli intelligence agencies gaining advance notice.
The attack was timed to start on the eve of Passover, April 5. Two days earlier, the shorting of the Israeli ETF “peaked…at levels very similar to those observed” on October 2. The recorded volume “was far higher (by an order of magnitude) than other days prior”:
This evidence strengthens the interpretation that the trading observed in October and April was related to the Hamas attack, rather than random noise.”
Ryan DeLarme is an American journalist navigating a labyrinth of political corruption, overreaching corporate influence, a burgeoning censorship-industrial complex, compromised media, and the planned destruction of our constitutional republic. He writes for Badlands Media and is also a Host and Founder at Vigilant News. Additionally, his writing has been featured in American Thinker, the Post-Liberal, Winter Watch, Underground Newswire, and Stillness in the Storm. He’s also writes for alt-media streaming platforms Dauntless Dialogue and Rise.tv. Ryan enjoys gardening, kung fu, creative writing and fighting to SAVE AMERICA
