Research shows investors having prior awareness of Hamas assault on Israel


(MENAFN) A new study conducted by law professors Robert Jackson Jr. from New York University and Joshua Mitts of Columbia University raises concerns about possible insider trading linked to the Hamas attack on Israel on October 7. The researchers focused on analyzing trading activities surrounding exchange-traded funds (ETFs) investing in Israeli companies, as well as short-selling and options activity on the Tel Aviv Stock Exchange (TASE) related to Israeli firms traded on United States exchanges.

The study specifically explores the concept of short-selling, a practice where investors bet on the decline in the price of a security. By borrowing and selling a security with the expectation of buying it back at a lower price later, traders aim to profit from the price drop. The researchers discovered noteworthy short-selling activity in the days leading up to the events that triggered the Israel-Hamas conflict.

According to the study, traders seemed to anticipate the upcoming events, with a significant increase in short interest observed in the Israel Exchange Traded Fund (ETF) on October 2. The ETF is commonly used as an investment vehicle for those looking to invest in Israel. On that day, the number of shares shorted surged from the typical 2,000 to over 227,000 shares, as reported by the Financial Industry Regulatory Authority (FINRA).

The professors' 66-page report also highlights a substantial spike in short-selling of Israeli securities on the Tel Aviv Stock Exchange just before the Hamas attack. This finding raises questions about whether some traders had prior knowledge of the impending events and used that information strategically to profit from the subsequent market movements.

The implications of potential insider trading surrounding geopolitical events are significant, as they could erode market integrity and raise ethical concerns. The study's findings underscore the importance of vigilant monitoring and investigation into trading activities during periods of heightened geopolitical tensions to ensure fair and transparent financial markets.

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