http://www.thetimes.co.uk/article/0,,2001320007-2001323297,00.html
BY JAMES DORAN
THE CIA has asked the City regulators in London
to investigate suspicious sales of millions of shares before last Tuesdays
attacks in America in the belief that the paper trail will lead to the
terrorists.
American authorities are investigating unusually
large numbers of shares in airlines, insurance companies and arms
manufacturers that were sold off in the days and weeks before the
attacks.
They believe that the sales were by people who
knew about the impending disaster.
The investigators are looking at so-called short
selling transactions in several financial centres across the world involving
shares that dropped dramatically after the attack.
Short selling involves borrowing shares, selling
them to a third party, then buying them back when the price falls. Large
profits can be made if a share price falls significantly after it has been
sold to the third party.
The Financial Services Authority (FSA), the
stock market watchdog, was drawn into the investigation because it has a
transaction monitoring department that checks suspicious share
movements.
The FSA would not comment on its instructions
from the CIA, but said that its team of specialists would do all they could to
help the investigation. A spokesman said: The financial authorities have great
expertise in this field and could have a big part to play. It is something
that is incumbent upon us all to look at to the best of our
ability.
Market regulators in Germany, Japan and the US
received information of short selling of insurance company shares, airline
stocks and shares in arms companies all of which have fallen since the attack.
Italian, French and Swiss regulators have also joined the
investigation.
Munich Re, Swiss Re and Axa, all insurance
companies, are also helping the authorities with the inquiries as large
numbers of their shares were short-sold before the attack.
A spokesman for Axa, a French company, said: We
have informed the market regulators in Paris that there are concerns about
short selling.
Richard Crossley, an analyst at Teather &
Greenwood, a City broker, said that he had tracked suspicious short selling
and share dumping in a swath of stocks badly affected by the terrorist
attacks.
He said that on the Friday before the attacks,
more than 10 million shares in Merrill Lynch, the US investment bank, were
sold compared with 4 million on a normal day. He added that exceptionally high
volumes of retail and leisure stocks had also caught his attention.
Before the attacks there was no pattern to this
phenomenon, he said. The shares that were sold were doing very well and
someone was selling them in very large quantities with no real
reason.
Mr Crossley believes that someone with inside
knowledge of the attacks could have been making money on its expected outcome
for up to three weeks before the terrorists struck.
"What is more awful than he should aim a
stiletto blow at the heart of Western financial markets? But to profit from
it. Words fail me," Mr Crossley said.
