Hamas-linked financiers made hundreds of millions of dollars in profits by shorting Israeli stocks before the Oct. 7 massacre, two analysts say.
An unidentified trader shorted 4.43 million shares of Israel’s largest bank, Leumi, between September 15 and October 5 – meaning he was betting that the price of Leumi shares would fall.
After the Oct. 7 attack, Leumi’s stock price actually collapsed as operations were crippled, making the trader, believed to have ties to Hamas, a $900 million profit.
The deal and others were uncovered by Robert J. Jackson, Jr. of New York University School of Law and Joshua Mitts of Columbia Law School.
On Monday they released a report on their findings titled: “Trafficking in Terror?”
They have speculated that the money may have gone back into Hamas operations. Jackson and Mitts did not say who was behind the deals, but noted they were highly unusual.
“Our results suggest that traders who were aware of the impending attacks profited from these tragic events, and consistent with previous literature, we show that trading of this type occurs in gaps in the enforcement of legal prohibitions on informed trading in the United States and performs on an international level,” they write.
Leumi Bank, the largest in Israel, was shorted by a trader from September 15 to October 5, netting the trader $900 million
Joshua Mitts (left) of Columbia Law School and Robert J. Jackson, Jr. of New York University School of Law (right) released their analysis of the deals on Monday
“We contribute to the growing literature on trade in the context of geopolitical events and offer suggestions for policymakers concerned about profitable trading based on information about impending military conflicts.”
And another trader made a remarkable 227,000 short trades on October 2 against the EIS – the Enterprise Investment Scheme (EIS), a security traded on the New York Stock Exchange.
The EIS provides investors with access to Israeli exchange-traded funds.
The value of EIS fell 7.1 percent on October 11 – the first day the US market was open after the terrorist attack – and lost 17.5 percent of its value within the first month, meaning a trader benefited significantly from the trades on October 2nd.
A trader made a remarkable 227,000 short trades against the EIS – the Enterprise Investment Scheme (EIS), a security traded on the New York Stock Exchange – on October 2nd
Revelers flee the supernova peace festival during the October 7 attacks that killed more than 1,200 Israelis
Hamas terrorists are seen taking hostages from communities near Gaza on October 7
The terrorists are said to have broken through the border fence with the Gaza Strip on October 7th
Abandoned and burned vehicles at the site of the October 7 attack on the Supernova desert music festival in southern Israel
Jackson and Mitts concluded: “It is extremely unlikely that the extent of short selling on October 2nd occurred by chance.”
The pair said the deals raised suspicions that they could have been carried out by someone with inside knowledge of the Hamas attack.
“Although we do not see an overall increase in short selling of Israeli companies on U.S. exchanges, we do note a sharp and unusual increase in trading in risky short-term options on these companies shortly before the attacks, which expire shortly after the attacks,” they wrote.
Hamas, which has been designated a terrorist organization by the United States since 1997, cannot conduct transactions on the open market.
Any Hamas member who attempted this risked having their assets frozen by the U.S. Treasury Department.
But the group has taken advantage of innovative financing systems such as cryptocurrencies.
A Wall Street Journal report found that between August 2021 and June 2023, three terrorist groups – Hamas, Palestinian Islamic Jihad and their Lebanese ally Hezbollah – collectively received over $134 million in cryptocurrencies.
The Journal reported that Hamas received around $41 million in digital currency over the nearly two-year period.
Islamic Jihad received $93 million.