An academic paper published Monday noted that certain stock market traders appeared to have foreknowledge of the Oct. 7 invasion of Israel.
The paper, titled “Trading on Terror?” written by law professors Robert Jackson Jr. and Joshua Mitts observed that they managed to “document a significant spike in short selling in the principal Israeli-company ETF days before the October 7 Hamas attack.” (RELATED: EXCLUSIVE: Rep. Pat Fallon Introduces Legislation Preventing Members, Spouses From Buying Or Selling Individual Stocks)
Hamas may have profited from Oct. 7 assault with informed trading — study https://t.co/nJlSvlI2eX . Click to read ⬇️
— The Times of Israel (@TimesofIsrael) December 4, 2023
“The short selling that day far exceeded the short selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic,” the law professors noted in their paper. They noted in their paper a number of other oddities that led them to conclude that there is a possibility that certain stock market traders had forewarning over Hamas’ Oct. 7 plans.
“Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in gaps in U.S. and international enforcement of legal prohibitions on informed trading.”
The study noted that the shorting of just one Israeli company alone during this time period would have yielded “millions” in profits “or approximates avoided losses” for these investors.
“We contribute to the growing literature on trading related to geopolitical events and offer suggestions for policymakers concerned about profitable trading on the basis of information about coming military conflict,” the professors wrote.
The study, however, has since been disputed. Yaniv Pagot, Tel Aviv Stock Exchange EVP head of trade, told Globes that the study erroneously listed shekels rather than agorot as the price of shares thereby magnifying “the loss per share 100 times.” He also told the outlet that large traders, like those the study described, would have had to sign “a share lending agreement with” a local stock exchange member and it would be very unlikely that a Hamas investor or straw company could get such an agreement.
“It is regrettable that the researchers did not check with Israeli TASE members and they could have asked how these things work in Israel,” Pagot told Globes, partially blaming the problems of the study on a “lack of familiarity with the local market.”
Since the outbreak of the Israel-Hamas War in Gaza, the Israeli stock market has taken a hit and the country’s growth rate projections have been reduced, The Times of Israel reported.