Israel investigates possible trading knowledge ahead of Oct 7 Hamas attack

investing.com:

By Steven Scheer

JERUSALEM (Reuters) — Israeli authorities are investigating claims by U.S. researchers that some investors may have known in advance of a Hamas plan to attack Israel on Oct. 7 and used that information to profit from Israeli securities.

Research by law professors Robert Jackson Jr from New York University and Joshua Mitts of Columbia University found significant short-selling of shares leading up to the attacks, which triggered a war nearly two months old.

«Days before the attack, traders appeared to anticipate the events to come,» they wrote, citing short interest in the MSCI Israel Exchange Traded Fund (ETF) that «suddenly, and significantly, spiked» on Oct. 2 based on data from the Financial Industry Regulatory Authority (FINRA).

«And just before the attack, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically,» they wrote in their 66-page report.

In response, the TASE referred Reuters to the Israel Securities Authority, which said: «The matter is known to the authority and is under investigation by all the relevant parties.»

A spokeswoman for the securities regulator did not elaborate, and Israeli police did not immediately comment.

The researchers said short-selling, in which investors expect the share price to fall, allowing it to be bought back at a lower price at a profit, prior to Oct. 7 «exceeded the short- selling that occurred during numerous other periods of crisis.»

That includes the recession following the financial crisis in 2008, the 2014 Israel-Gaza war, and the COVID-19 pandemic.

They wrote that for Leumi, Israel's largest bank, 4.43 million new shares sold short over the Sept. 14 to Oct. 5 period yielded profits of 3.2 billion shekels ($862