SELLING STOCKS SHORT INDICATES FOREKNOWLEDGE

Studying recent financial history, one gets the distinct idea that when an event is planned by elite insiders that will dramatically affect the stock market, some greedy individuals with inside connections cannot resist the temptation to profit from such events.

In 1963, in the wake of the assassination of President John F. Kennedy, the New York Stock Exchange recorded a record $21 billion advance, making for the largest single-day rise in the history of the market. It was estimated that the short selling of stock earned unidentified speculators more than $500 million.

Similar suspicious stock trades were reported following the 9/11 attacks. These activities, which implied foreknowledge of the attacks, were loudly trumpeted in the mass media at the time. However, within weeks, this incredible story of high-level profiteering based on the short selling of certain stocks dropped off the corporate mass media's radar screen never to be heard from again.

The evidence of widespread short selling of airline stocks and other forms of insider trading just prior to September 11, 2001 is compelling. Just as there is growing evidence that many insiders had foreknowledge of these attacks, there are clear indications that some used this prior knowledge—not only to profit directly from the deaths of thousands of people—but to do so with the assurance that they would not be caught in such evil machinations. They would also have to have been in a position to know that the attacks would succeed.

Elementary logic also indicated that direct involvement of al Qaeda terrorists in such insider trading was highly unlikely. The idea that Osama bin Laden or al Qaeda leaders would telegraph their intentions through easily tracked stock trades before their attack is implausible, to put it mildly.

Selling stocks short involves having your broker sell shares you don't yet own at a set price to a given buyer, while betting—or perhaps knowing—you can actually acquire them later at a lower price and supply them to the buyer at the set price within a prescribed short time. If you “bet” right, the difference in price is your profit. This form of derivative is risky and you can lose at this game, but you can also win big, especially if you have foreknowledge of an event which will impact the market. Historically, if short selling precedes a traumatic event, it is considered to be an indication of foreknowledge.

Although strictly denied by the US government, it is widely known that the CIA uses the PROMIS computer software to routinely monitor stock trades—in real time—as a possible warning sign of a terrorist attack or suspicious economic behavior. We can safely infer that the CIA could have known in virtual real time, from such trading data alone, that the 9/11 attack was imminent and that it would involve two specific airlines. It also follows that they should also have been able to pinpoint the inside traders through the electronic trail.

It was initially reported by the Israeli Herzliya International Policy Institute for Counterterrorism, a think tank involving former Israeli intelligence officers, that insiders made nearly $16 million profit by short-selling shares in American and United Airlines, the two airlines that suffered the hijackings, as well as the investment firm of Morgan Stanley, which occupied twenty-two floors of the WTC.

According to many other sources, the scandal was much greater even than this. Phil Erlanger, the founder of a Florida firm that tracks short selling and options trading, estimated that traders made off with billions rather than millions of dollars in profit by short selling stocks they knew would tumble in the aftermath of the WTC and Pentagon attacks.

Andreas von Bülow, a former member of the German Parliament and ranking member of the German secret service, estimated profits made by insider traders at $15 billion. CBS offered a far more conservative figure when it reported on Sept 26, 2001, that, “at least seven countries are dissecting suspicious trades that may have netted more than $100 million in profits.”

A small FBI scandal indicated that foreknowledge may have prompted bureau agents to seek profit from the attacks. Five persons, including a former and a current agent, were charged in May 2002, with using confidential government information to manipulate stock prices and extort money from businesses.

In indictments brought in Brooklyn, San Diego stock adviser Amr Ibrahim Elgindy was accused of bribing FBI agent Jeffrey A. Royer to give him information on publicly traded companies. Royer, who had worked for the FBI between 1996 and 2000, subsequently left the bureau and went to work for Elgindy's firm, Pacific Equity Investigations. Another FBI agent, Lynn Wingate, was also indicted, accused of passing information to Royer and helping to track investigations of Elgindy through FBI computers. Elgindy reportedly supported Muslim refugees in Kosovo.

According to Assistant US Attorney Kenneth Breen, Elgindy tried to sell $300,000 in stock on September 10, 2001, and told his broker the market was about to drop. Breen saw this as evidence of foreknowledge of the 9/11 attacks. However, higher officials claimed there was no hard evidence of such foreknowledge or that Elgindy had obtained insider information from his FBI contacts.

Elgindy's father, Ibrahim Elgindy, founded a consortium of Muslim organizations in Chicago and spearheaded a 1998 protest on behalf of Muhammad A. Salah, whose assets were seized after US investigators linked Salah to Palestine's radical Hamas organization.

A week after the September 11 attacks, the London Times reported that the CIA had asked regulators for the Financial Services Authority in London to investigate the suspicious sales of millions of shares of stock just prior to the terrorist acts. It was hoped that the business paper trail might lead to the terrorists. The Times said market regulators in Germany, Japan, and the United States all had received information concerning the short selling of insurance, airlines, and investment banking stocks, all of which fell sharply in the wake of the attacks.

City of London broker and analyst Richard Crossley noted that certain parties had sold shares in unusually large quantities beginning three weeks before the assault on the WTC and Pentagon. Crossley stated that on the Friday preceding the attacks, more than 10 million shares in the US investment bank Merrill Lynch were sold, compared with 4 million on a normal trading day. “What is more awful than [the perpetrators] should aim a stiletto blow at the heart of Western financial markets?” he added. “But to profit from it. Words fail me.”

Stock market regulators in Germany also reported suspicious short selling just prior to September 11.

In the United States, there was an unusually high volume of five-year US Treasury note purchases made just prior to 9/11. The Wall Street Journal on October 2, 2001, noted, “Five-year Treasury notes are among the best investments in the event of a world crisis, especially one that hits the US.” “This could very well be insider trading at the worst, most horrific, most evil use you've ever seen in your entire life, or this would be one of the most extraordinary coincidences in the history of mankind, if it was a coincidence,” said Bloomberg Business News writer Dylan Ratigan.

What are the specifics? Just prior to the 9/11 attacks, there were an unusually high number of “put” options purchased for the stocks of AMR Corp. and UAL Corp., the parent firms of American and United Airlines. A put option gives the bearer the right to sell at a specified price before a certain date. Just like short selling, placing a put option is betting that the stock will fall in price.

According to pioneer 9/11 researcher and former LA police detective Michael Ruppert, between September 6 and 7, 2001, the Chicago Board of Options Exchange reported 4,744 put options on UAL but only 396 call options. On September 10, there were 4,516 put options placed on American Airlines compared to only 748 calls. (Calls reflect the belief that the stock will increase in worth.) American's 6,000 percent jump in put options on the day before the attacks was not matched by any other airlines.

“No similar trading in any other airlines occurred on the Chicago Exchange in the days immediately preceding Black Tuesday,” Ruppert said in an October 2001 interview. “That means that someone had advance knowledge that only the stocks of these two airlines would be adversely impacted. Had it just been an industry-wide slump, then you would have seen the same kind of activity on every airline, not just these two.”

There were other questionable stock trades made just prior to 9/11. According to Ruppert, Morgan Stanley Dean Witter & Co., which occupied twenty-two floors of the WTC, witnessed the purchase of 2,157 put options during the three trading days before the 9/11 attacks as compared to 27 per day prior to September 6. Merrill Lynch & Co., which also had offices on twenty-two floors of the WTC, had 12,215 one-month put options bought during four trading days prior to 9/11 compared to the normal 252 contracts per day.

“I saw put-call numbers higher than I’ve ever seen in 10 years of following the markets, particularly the options markets,” John Kinnucan, a principal of the independent telecommunications research firm Broadband Research, told the Associated Press.

Alex Popovic, vice president of the Investment Dealers Association of Canada, in early October 2001 confirmed that the US Securities and Exchange Commission had provided a list of thirty-eight companies for scrutiny whose shares had been traded suspiciously but said their review need not be limited to those firms listed. “One shouldn't be wearing blinders when looking at that sort of thing,” Popovic told the Associated Press.

Earlier, this same commitment to an opened-ended investigation was voiced by SEC chairman Harvey Pitt, who stated his agency's “No. 1 priority” was to pursue the possible trading by people associated with the terrorists.

Interestingly enough, one of the thirty-eight companies was Vornado Realty Trust, a New Jersey-based firm that earlier in 2001 lost a bid to lease the World Trade Center complex from its owner, the Port Authority of New York, to real estate developer Larry A. Silverstein. By early 2003, Silverstein was still in court fighting insurers over whether or not the two planes that struck the WTC constituted one or two separate attacks. Leaseholder Silverstein argued that there were two strikes, which entitled him to a $7.1 billion total payment, $3.55 billion for each attack.

In fact, by adhering to the old journalist creed of “Follow the Money,” it is instructive to consider who profited most from the destruction of the WTC structures. On July 24, 2001, Silverstein Properties and Westfield America took out a 99-year lease on the World Trade Center. The total cost of the lease was $3.2 billion. However, by September 11, 2001, the leaser, the Port Authority of New York and New Jersey, had only received an initial payment of about $125 million. In the one-and-a-half months after signing the new lease, Securacom, a firm whose directors included President George W. Bush's younger brother Marvin and his cousin, CEO Wirt Walker III, was engaged to provide security services for the World Trade Center as well as Dulles International Airport and United Airlines, two other entities involved on 9/11. Insurance, including a stipulation that payments would be made in the event of terrorist attack, was arranged through global carriers such as Swiss Re and the German giant Allianz. Following negotiations, Silverstein was finally awarded a total of $4.6 billion for his $125 million investment, accruing a tidy $4,475,000,000 profit. It has been reported that the Port Authority at some point repaid the initial $125 million.

By the end of 2001, stories of profiting on terrorism had vanished. Apparently none of the suspicious put-option transactions could be traced to bin Laden, so this news item quietly dropped from sight—or, perhaps more accurately—was quietly removed from sight, despite the official investigations that were ongoing behind the scenes by the SEC, the FBI, and foreign securities regulators, as was later acknowledged in The 9/11 Commission Report. But, if the suspicious trading could not be linked to bin Laden, who was at the end of the investigative trail? Many people wondered if it tracked back to American firms or intelligence agencies. This appears to be the case.

According to the San Francisco Chronicle, “[A] source familiar with the United trades identified Deutsche Bank Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of these options.”

But this story got worse. The UK’s Independent reported on October 15, 2001: “To the embarrassment of investigators, it has also emerged that the firm used to buy many of the ‘put’ options…on United Airlines stock was headed until 1998 by ‘Buzzy’ Krongard, now executive director of the CIA. “Until 1997, Mr Krongard was chairman of Alex. Brown Inc., America's oldest investment banking firm. Alex. Brown was acquired by Bankers Trust, which in turn was bought by Deutsche Bank. His last post before resigning to take his senior role in the CIA was to head Bankers Trust—Alex. Brown's private client business, dealing with the accounts and investments of wealthy customers around the world.” Beginning in 1998, Krongard was counselor to CIA director George Tenet and on March 26, 2001, he was appointed executive director of the CIA.

As chairman of Alex. Brown, Krongard was a man with long-standing and close ties to the financial world. Moving up through the ranks of Alex. Brown, Krongard was elected chief executive officer in 1991 and then chairman of the board in 1994. With the merging of Alex. Brown and Bankers Trust Corp. in 1997, Krongard served as vice chairman of the board until joining the CIA. Bankers Trust was acquired by Deutsche Bank in 1999, becoming the single largest bank in Europe.

Krongard also served as chairman of the Securities Industry Association. A native of Baltimore, he received degrees from Princeton University and the University of Maryland's law school and served as an infantry officer in the Marine Corps. Although Krongard resigned from the CIA with the arrival of CIA Director Porter Goss in September 2004, he nevertheless was a key connection between Blackwater security consulting and the CIA. According to Jeremy Scahill, author of Blackwater: The Rise of the World's Most Powerful Mercenary Army, Krongrad was instrumental in obtaining one Blackwater's first security contracts.

“Understanding the interrelationships between CIA and the banking and brokerage world is critical to grasping the already frightening implications of [these] revelations,” commented author Michael Ruppert.

Krongard indeed was just the latest of many prominent Americans connected to both the CIA and Wall Street power. These include Clark Clifford (who was a key player in gaining legitimacy for BCCI, a bank which collapsed in scandal), John Foster Dulles and Allen Dulles (Allen oversaw the failed Bay of Pigs invasion and sat on the Warren Commission, and both Dulles brothers were involved with the Bush-Nazi connection detailed later), William Casey (who moved to the agency after a stint as chairman of the Securities and Exchange Commission), David Doherty (former CIA general counsel, now vice president of the New York Stock Exchange), former president George Herbert Walker Bush (now a paid consultant to the international Carlyle Group, which lists among its clients the bin Ladens), John M. Deutch and Nora Slatkin (Deutch, a former CIA director, and his former executive director Slatkin are both now connected to Citibank and Citigroup) and Hank Greenberg (once nominated as CIA director, then chairman of AIG Insurance representing the third largest pool of investment capital in the world. (He is no longer with AIG and is embroiled in a bitter legal battle over the circumstances of his dismissal.)

As detailed in Rule by Secrecy, the CIA historically has been top heavy with members of the Wall Street elite who desire to advance their globalist agenda. It also operates a number of front companies which themselves deal in stocks and bonds.

Again it should be noted that the CIA’s PROMIS computer software that is used to track real-time trades in world stock markets should have alerted the Wall Street/CIA elites to all this unusual stock trading and perhaps even of the pending 9/11 attacks.

The PROMIS software had been developed by a computer program designer named Bill Hamilton, who took his work to the federal government only to have the sophisticated software stolen by President Ronald Reagan's attorney general, Ed Meese. This software, which seemed a promising weapon in tracking criminals and illegal money, was turned into an Orwellian program that integrates databases worldwide, giving its possessor nearly unlimited access to all computer records.

“One of the primary functions of the Central Intelligence Agency, by virtue of its long and very close history of relationships with Wall Street, has been a mandate to track and monitor all financial markets worldwide—and to look for anomalous trades, indicative of either economic warfare, or insider currency trading, or speculation—which might affect the US Treasury, or, as in the case of the September 11 attacks, to look for trades that indicated foreknowledge of attacks like we saw,” Ruppert told OnLine Journal on October 12, 2001. “I am absolutely convinced that the Central Intelligence Agency had complete and perfect foreknowledge of the attacks, down to the date, time, place and location,” he concluded.

Author Don Radlauer, who specializes in stock options and derivatives, noted the suspicious stock trading and stated, “Obviously, anyone who had detailed knowledge of the attacks before they happened was, at the very least, an accessory to their planning; and the overwhelming probability is that the trades could have been made only by the same people who masterminded the attacks themselves.”

Now, just who might that be?

The US government itself was holding the majority of the international and domestic “short” positions, according to commodity trading advisor Walter Burien, a financial analyst and former tenant of the World Trade Center. According to Burien, government money managers are the primary players within the trillion-dollar international derivative market. “A derivative gives the ability for selling the market ‘short’ on paper even if you do not own the stock, commodity, currency, bonds, etc.,” explained Burien. “The government investment managers over the last thirty years have become very familiar with using this tactic to reap hundreds of billions of dollars each year.

“The government—which controls the economic reports, media coverage and wealth—is in a position to manipulate the above and create an environment to secure substantial revenue while everyone else is lying on the shoulder of the road bleeding to death. For three months prior and going into 9/11, the government investment funds had increased their short positions to the largest diversified short positions ever held by them,” noted Burien.

As documented previously, foreknowledge of 9/11 was widely distributed. It is not hard to image that this knowledge migrated to highly placed investors throughout the world who felt safe enough to capitalize on this insider information for a quick profit.

The suspicious stock market trading indicating foreknowledge of the 9/11 attacks only added to the ever-growing belief that people in high positions knew what was coming in September 2001.

Speaking of all the warnings that poured into government agencies, Jerry Bremer, a former State Department terrorism expert, said, “We all predicted this. We had strategic warning. This is not something the analysts missed.”

The evidence of foreknowledge contained within the stock issue and the desire to cover it up may explain the cursory glance given this subject by the 9/11 Commission, along with its rather questionable logic.

Commission authors dismissed the entire issue of insider trading in a buried footnote, stating, “Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation.” In making this final conclusion, it refers to the “enormous resources” expended on the investigation of the issue by the FBI and the CIA and other agencies both domestic and foreign, but does not provide the reader any means to access to these references in order to independently check on the commission's conclusions.

Buried in the same footnote, the commission did manage to trace most of the United Airlines “puts” to one institutional US investor, but dismissed this case simply because this unnamed trader “had no conceivable ties to al Qaeda…”

But any hope that the truth of the foreknowledge behind the unusual put options might be forthcoming in some future honest investigation were dashed in 2010, when it was learned that the Security and Exchange Commission had destroyed all documents pertaining to the pre-9/11 put options purchases. According to the website Washington's Blog, David Callahan, the executive editor of SmartCEO, submitted a Freedom of Information Act request to the SEC regarding the pre-9/11 put options. In a letter to Callahan dated December 23, 2009, the SEC stated:

“This letter is in response to your request seeking access to and copies of the documentary evidence referred to in footnote 130 of Chapter 5 of The September 11 [9/11] Commission Report. Based on the information you provided in your letter, we conducted a thorough search of the commission's various systems of records and consulted with other commission staff. However, we have been advised that the potentially responsive records have been destroyed.”

Such cavalier treatment of potentially explosive evidence of 9/11 foreknowledge prompted the author of Washington's Blog to comment: “If the SEC had responded by producing documents showing that the pre-9/11 put options had an innocent explanation (such as a hedge made by a smaller airline), that would be understandable. If the SEC had responded by saying that the documents were classified as somehow protecting proprietary financial information, I wouldn't like it, but I would at least understand the argument. But destroyed? Why?” Understandably, 9/11 researchers smelled a cover up.