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Friday September 28 4:46 PM ET
Global Attack Profiteering Probe Cools, Continues
By Kevin Drawbaugh
WASHINGTON (Reuters) - No smoking gun emerged this week from a global probe into whether those behind the Sept. 11 attacks on America tried to turn a gruesome profit on the markets from their inside knowledge, but financial regulators said their inquiries continue.
U.S. officials said on Friday that an investigation involving the FBI (news - web sites) and the Securities and Exchange Commission (news - web sites) was proceeding and declined further comment, although SEC Chairman Harvey Pitt on Thursday told lawmakers that the inquiry was the agency's ``No. 1 priority.''
UK regulators said on Friday they had found no evidence of pre-attack attempts at profiteering, echoing earlier findings released by Japanese and Dutch officials.
``In the course of our investigations, we have found nothing to date that has given us any suggestions that somebody had profited from insider knowledge in relation to these attacks,'' said Karin Loudon, spokeswoman for British markets regulator the Financial Services Authority.
German markets watchdog BAWe said it had no evidence, either, but added it was still hunting through mountains of data for clues. Spokesman Christian Pawlik said, ``Normally we look into one single stock, but you can't limit this investigation to one firm. You have to look at whole sectors.''
French regulators were expected to meet on Friday to review possible findings from a probe of pre-attack trading activity.
Market watchdogs around the world were digging into reports of unusual trading in stocks and related options of airline, travel and insurance companies prior to the attacks on the World Trade Center and the Pentagon (news - web sites) that left thousands dead.
Official probes have been launched by regulators in Washington and New York, Chicago, London, Amsterdam, Paris, Frankfurt, Zurich, Milan, Luxembourg, Tokyo and Hong Kong.
None of these has produced, at least not publicly, any evidence of a trading conspiracy among attack organizers. Both heavy short-selling of some securities and large put option purchase volumes in others have been largely explained by factors unrelated to the attacks, officials said.
Short-selling and put option buying are ways of profiting from falling share prices. Anyone with foreknowledge of the attacks could have used such methods to reap huge profits from subsequent declines in airline, travel and insurance stocks.
BIN LADEN WORTH MILLIONS
Osama bin Laden (news - web sites), tagged by President Bush (news - web sites) as the prime suspect in the attacks on New York and Washington, is one of several heirs to a family construction business fortune. His personal wealth is estimated at as much as $300 million.
Experts on Middle Eastern extremists have said bin Laden and associates are capable of sophisticated financial dealings. But some doubted whether bin Laden, thought to be holed up in the badlands of Afghanistan (news - web sites), could have pulled off such an audacious scheme.
Moreover, they said, whether anyone tried to cash in on foreknowledge of the attacks would be hard to prove due to the size and impenetrability of securities markets in an electronic age of lightning transactions and multiple intermediaries.
Financial exchanges keep careful records of the brokers who execute trades, but only the brokers' employers know where trade orders come from and their knowledge only goes so far.
``Any evidence of a massive global conspiracy seems quite opaque,'' said a regulator with international responsibilities who asked not to be named. ``But that doesn't mean something won't come to light after the fact, or maybe five years from now when they're sifting through all the historical evidence.''
While securities regulators have been scouring trading records for unusual activity, banking regulators have escalated their war on money laundering with an eye toward tracking down attack organizers' funds at the source and cutting them off.
This effort was seen as equally daunting in its own way, said money-laundering experts.
``We have to bear in mind that at no point are we going to find an account with the name of Osama bin Laden on it,'' said Nigel Morris-Cotterill, a consultant and editor of the periodical World Money Laundering Report.
``If a terrorist wanted to hide transactions, it would be very simple to go form a company with an Anglo-Saxon-sounding name ... In many states and countries, there are no checks whatsoever on whether the people forming a company really are who they say they are.''
(Additional reporting by Jane Merriman in London, Thomas Atkins in Frankfurt).