TEL AVIV - The Tel Aviv Stock Exchange (TASE) has dismissed allegations that Hamas benefited from short-selling Israeli securities prior to a terrorist attack on October 7, 2023. A study by U.S. academics pointed to unusual trading patterns suggesting foreknowledge of the incident, but TASE officials have cited strict anti-money laundering protocols as a defense against such illicit activities.
The contentious issue arose following a report by professors Robert J. Jackson, Jr. from NYU and Joshua Mitts from Columbia University, which observed abnormal short selling in iShares MSCI Israel ETF and Bank Leumi around the time of the attack. The researchers highlighted suspicious market behavior during a typically low-activity period due to Jewish holidays, including a surge in short-selling that peaked on April 3 amid early rumors of a Hamas plot and again on October 2, just days before the attack.
Following the October 7 event, Bank Leumi's stock value experienced a significant drop of nearly 9% the next day. These trading anomalies led to an investigation into whether these trades could have been made with advance knowledge of the attack, aiming for substantial profits from the subsequent market reaction.
Yaniv Pagot of the Tel Aviv Stock Exchange addressed these concerns, emphasizing TASE's robust measures to prevent money laundering and enforce share lending agreements. According to Pagot, such regulations would effectively prevent entities like Hamas or related organizations from engaging in the alleged informed trading.
The study by Jackson and Mitts has drawn parallels between the trading activity seen before the October attack and heightened market movements during past crises, such as the financial crash and the pandemic. This has sparked discussions about the need for more stringent enforcement against illegal trading practices based on non-public information.
The Israel Securities Authority (ISA) is actively investigating the trades in question. The scrutiny comes at a time when global financial markets are increasingly vigilant about preventing illegal activities that can undermine investor confidence and market integrity.
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