SEC: Government Destroyed Documents Regarding Pre-9/11 Put Options

On September 19, 2001, CBS reported:

tell CBS News that the afternoon before the attack, alarm bells were
sounding over unusual trading in the U.S. stock options market.

extraordinary number of trades were betting that American Airlines
stock price would fall.

The trades are called "puts" and they
involved at least 450,000 shares of American. But what raised the red
flag is more than 80 percent of the orders were "puts", far
outnumbering "call" options, those betting the stock would rise.

say they have never seen that kind of imbalance before, reports CBS
News Correspondent Sharyl Attkisson. Normally the numbers are fairly

After the terrorist attacks, American Airline stock price
did fall obviously by 39 percent, and according to sources, that
translated into well over $5 million total profit for the person or
persons who bet the stock would fall.


At least one
Wall Street firm reported their suspicions about this activity to the
SEC shortly after the attack.

The same thing happened with
United Airlines on the Chicago Board Options Exchange four days before
the attack. An extremely unbalanced number of trades betting United’s
stock price would fall — also transformed into huge profits when it did
after the hijackings.

"We can directly work backwards from a
trade on the floor of the Chicago Board Options Exchange. The trader is
linked to a brokerage firm. The brokerage firm received the order to
buy that ‘put’ option from either someone within a brokerage firm
speculating, or from one of the customers," said Randall Dodd of the
Economic Strategy Institute.

U.S. investigators want to know
whether Osama bin Laden was the ultimate "inside trader" — profiting
from a tragedy he’s suspected of masterminding to finance his
operation. Authorities are also investigating possibly suspicious
trading in Germany, Switzerland, Italy and Japan.

September 29, 2001, the San Francisco Chronicle pointed

"Usually, if someone has a
windfall like that, you take the money and run," said the source, who
spoke on condition of anonymity. "Whoever did this thought the exchange
would not be closed for four days.

"This smells real bad."


was an unusually large jump in purchases of put options on the stocks
of UAL Corp. and AMR Corp. in the three business days before the attack
on major options exchanges in the United States. On one day, UAL put
option purchases were 25 times greater than the year-to-date average.
In the month before the attacks, short sales jumped by 40 percent for
UAL and 20 percent for American.


for British securities regulators and the AXA Group also confirmed
yesterday that investigations are continuing.

The source familiar
with the United trades identified Deutsche Banc Alex. Brown, the
American investment banking arm of German giant Deutsche Bank, as the
investment bank used to purchase at least some of the options.


weekend, German central bank president Ernst Welteke said a study
pointed to "terrorism insider trading" in those stocks.

Chronicle illustrated the story with the following chart:

On October 19, 2001, the Chronicle wrote:

Oct. 2, Canadian securities officials confirmed that the SEC privately
had asked North American investment firms to review their records for
evidence of trading activity in the shares of 38 companies, suggesting
that some buyers and sellers might have had advance knowledge of the

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