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911 attacks not linked to stock gains { July 23 2004 }

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Report: Sept. 11 attacks, stock gains not linked
High volume has other explanations

By Andrew Countryman
Tribune staff reporter
Published July 23, 2004

Despite concerns that arose after the Sept. 11 terrorist attacks, investigators said Thursday that they found no evidence that anyone profited from stock and options trading based on advance knowledge of the attacks.

Shortly after the attacks, reports emerged that in the days leading up to Sept. 11, some traders placed unusually large bets for stock prices to fall at several firms, particularly for the parent companies of United and American Airlines, whose planes were hijacked and used in the attacks.

That prompted speculation that some people who knew about the attacks also had sought to make a quick buck.

Before the attacks, volume in put options and short selling, which make money when a stock price falls, had spiked for United parent UAL Corp., American parent AMR Corp. and plane giant Boeing Co. Traders also reported heavier-than-usual volume in several hotel stocks, which were also vulnerable to a sharp drop-off in travel.

Stocks indeed sank when markets reopened after the attacks, with shares of UAL dropping 43 percent on the day trading resumed and AMR's shares falling 39 percent.

Tribune research had put the potential profits from the UAL options trading alone at more than $4 million.

But in its long-awaited report released Thursday, the bipartisan 9/11 commission said each trade had "an innocuous explanation."

The commission said an unidentified U.S. institutional investor "with no conceivable ties to Al Qaeda" bought 95 percent of UAL put options on Sept. 6, when volume soared, as part of a trading strategy that also saw it buy shares of AMR. The panel attributed a sharp climb in AMR put options volume on Sept. 10 to a recommendation in an options-trading newsletter.

The commission said investigators at the FBI, the Securities and Exchange Commission and other agencies "devoted enormous resources to investigating this issue," with the help of foreign governments.

The SEC said it examined more than 9.5 million transactions involving 103 companies in various industries, along with trading in several index products.

"We did not develop any evidence suggesting that anyone who had advance knowledge of the Sept. 11 attacks traded on the basis of that information," the SEC said in a statement.

Copyright 2004, Chicago Tribune

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