Israeli authorities are investigating a report by American scientists that some investors may have known in advance about Hamas’ Islamic plan to attack on October 7. Research by law professors Robert Jackson Jr. of New York University and Joshua Mitts of Columbia University found that there had been significant short selling of stocks before the attacks. By selling short, investors bet on falling prices.
“Even days before the attacks, traders seemed to predict what was coming,” the researchers said in a report, citing short selling on the MSCI Israel ETF. According to data from US regulator Finra, these “suddenly and significantly increased” on October 2.
Short selling of Israeli bonds increased dramatically on the Tel Aviv stock exchange, according to the 66-page report. The Israel Securities Authority told Portal it was aware of the matter. It will be “investigated by all relevant parties”. A spokeswoman for the securities regulator declined to comment further and no comment was initially available from Israeli police.
By selling short, investors bet on falling prices. According to US researchers, short sales before October 7th exceeded those before other crises, such as the financial crisis, the 2014 Israel-Gaza war or the corona pandemic.
“While we did not observe an overall increase in short selling of Israeli companies on US exchanges, we did notice a large and unusual increase in risky short options trading on companies that expired shortly after the attacks, just before the attacks,” the report says . first reported by Israeli financial news website The Marker. “Our results suggest that traders who were aware of the impending attacks benefited from these tragic events.”