The Blubber

Israeli authorities are investigating claims by U.S. researchers that some investors may have known in advance of a Hamas plan to attack Israel on Oct. 7 and used that information to profit from Israeli securities by dramatically increasing short selling, per Reuters.

Read full story: https://www.reuters.com/world/middle-east/israel-investigates-possible-trading-knowledge-ahead-oct-7-hamas-attack-2023-12-04/

Law professors Robert Jackson Jr. from New York University and Joshua Mitts of Columbia University conducted research indicating significant short-selling of shares before the attacks that led to a war almost two months later.

They observed a spike in short interest in the MSCI Israel Exchange Traded Fund (ETF) on October 2, just days before the attack. Additionally, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically right before the attack.

The Israel Securities Authority is investigating the matter. The professors found that short-selling before October 7 exceeded levels observed during other periods of crisis, including the 2008 financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic. They suggested that traders informed about the impending attacks profited from these events, taking advantage of gaps in U.S. and international enforcement of legal prohibitions on informed trading.

The professors also noted similar short-selling patterns in early April when reports indicated Hamas was planning an attack on Israel.