Recently, US researchers Robert J. Jackson Jr. and Joshua Mitts from New York University and Columbia University conducted an investigation into suspicious trading activity surrounding events in Israel. It was found that traders in New York and Tel Aviv were betting on a collapse in the Israeli stock market prior to a terrorist attack by Hamas, although it is unclear whether Hamas was directly involved in these transactions.
The researchers discovered that certain traders appeared to have inside information about the impending attacks and profited from them. The Israeli security authorities are taking these reports seriously and are investigating the events. Suspicious trading activity had also been detected prior to a previous incident in April, indicating a pattern of behavior among certain market participants.
Short sellers, who speculate on falling prices, were particularly active in trading the ETF MSCI Israel, which tracks Israeli stocks listed on the Tel Aviv Stock Exchange (TASE). Activity in short selling on the ETF significantly increased five days before the attack, leading the researchers to suspect that some traders were aware of the impending events. The volume of short sales on October 2nd exceeded that seen during other times of crisis, such as the financial crisis in 2008 or the Covid pandemic in 2020.
Israeli companies such as Checkpoint, Nice, Teva, and Bank Leumi were among those listed on the TASE. Parties involved in short sales targeted not only Bank Leumi shares but also dozens of other Israeli shares in the main indices TA-35 and TA-90. Short sellers take advantage of non-public information to profit from falling prices by borrowing shares, selling them, and buying them back at a lower price later on.
Overall, these findings suggest a pattern of suspicious trading activity surrounding events in Israel and raise questions about ethical and legal implications for profiting from inside information. As investigations continue, it remains to be seen whether any connections to terrorist organizations such as Hamas will be uncovered.