September 11 Commission Report - Gnostic Liberation Front

Target Put
Options
Table 1
Unclaimed Stock Options
Time when trades were
placed
Merrill Lynch & Co 12,215 four trading days before the
attacks
Morgan Stanley Dean
Witter & Co
Of Interest
Occupied 22 floors of the
World
2,157 three trading days Occupied 22 floors of the
World Trade Center
United Airlines 4,744 two and three trading days
American Airlines 4,516 one trading day
These are the data points one always sees in the news, but there were other trades –
significant trades, mostly in financial companies!
• "Citigroup Inc., which has estimated that its Travelers Insurance unit may pay $500 million in claims
from the World Trade Center attack. It had a jump in trading of October options that profit if shares
fall below $40 apiece. Almost 14,000 of those options contracts were traded from Sept. 6 to Sept. 10 --
about 45 times the previous daily average. Citigroup shares fell $2.85 today to $39.60. "
• " Bear Stearns & Cos., where investors traded 3,979 contracts from Sept. 6 to Sept. 10 on September
options that profit if shares fall below $50. The previous average volume for those options was 22
contracts. Bear Stearns shares fell $3.79 today to $46.45. "
• " Marsh & McLennan Cos., the biggest insurance brokerage, which had 1,700 employees working in
the World Trade Center. Traders on Sept. 10 exchanged 1,209 contracts on options that profit if
company shares fall below $90 through the third week of September. Previously, 13 contracts had
traded on an average day. Marsh & McLennan shares fell $2.50 today to $84.50.'
• "The Wall Street Journal reported on October 2 that the ongoing investigation by the SEC into
suspicious stock trades had been joined by a Secret Service probe into an unusually high volume of
five-year US Treasury note purchases prior to the attacks. The Treasury note transactions included a
single $5 billion trade. As the Journal explained: “Five-year Treasury notes are among the best
investments in the event of a world crisis, especially one that hits the US. The notes are prized for their
safety and their backing by the US government, and usually rally when investors flee riskier
investments, such as stocks.” The value of these notes, the Journal pointed out, has risen sharply since
the events of September 11. The article went on to quote Michael Shamosh, a bond-market strategist
for Tucker Anthony Inc., who said, “If they were going to do something like this they would do it in
the five-year part of the market. It’s extremely liquid, and the tracks would be hard to spot.” The SEC
has been extremely tight-lipped about its probe, in which it has enlisted securities firms and
government agencies in Europe, Canada and other countries. But on Tuesday the Investment Dealers
Association, a trade association for the Canadian securities industry, posted on its web site a list sent
by the American SEC of 38 stocks. The US agency had asked the Canadians to look into trading in
these stocks between August 27 and September 11. As soon as US officials became aware of the
Internet posting, they demanded that the Investment Dealers Association yank it from the web site, and
the Canadian organization complied. However, reporters and others were able to copy the list before it
was pulled. The list includes the parent companies of American, Continental, Delta, Northwest,
Southwest, United and US Airways, as well as Carnival and Royal Caribbean cruise lines, aircraft
THE SEPTEMBER 11 COMMISSION REPORT Page 111