Aftermath of The September 11 Attacks - Market Activity Investigations

Market Activity Investigations

The National Commission on Terrorist Attacks Upon the United States (also known as the "9/11 Commission") investigated these rumors and found that although some unusual (and initially seemingly suspicious) trading activity did occur in the days prior to September 11 attacks, it was all coincidentally innocuous and not the result of insider trading by parties with foreknowledge of the 9/11 attacks:

Highly publicized allegations of insider trading in advance of 9/11 generally rest on reports of unusual pre-9/11 trading activity in companies whose stock plummeted after the attacks. Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation. For example, the volume of put options—instruments that pay off only when a stock drops in price—surged in the parent companies of United Airlines on September 6 and American Airlines on September 10—highly suspicious trading on its face. Yet, further investigation revealed that the trading had no connection with 9/11. A single US-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10. Similarly, much of the seemingly suspicious trading in American on September 10 was traced to a specific US-based options trading newsletter, faxed to its subscribers on Sunday, September 9, which recommended these trades. The SEC and FBI, aided by other agencies and the securities industry, devoted enormous resources to investigating this issue, including securing the cooperation of many foreign governments. These investigators have found that the apparently suspicious consistently proved innocuous.