A recent study conducted by law professors at Columbia University and New York University suggests that Hamas may have made millions of dollars by short-selling Israeli companies in anticipation of the October 7th attacks. The researchers found a significant increase in short selling, which involves betting against the value of a security, in the most widely used fund linked to Israeli companies. This surge occurred five days before the attacks and was deemed unusual compared to previous events such as the Covid-19 pandemic, the 2014 Israel-Gaza war, and the 2008 global financial crisis.
The researchers believe that traders who were informed about the impending attacks were able to profit from them. Professor Jonathan Macey of Yale Law School described the evidence as “strong” and expressed concern about regulators’ ability to identify the entities responsible for this trading.
The study also revealed that nearly 100% of off-exchange trading volume in the MSCI Israel ETF consisted of short selling on October 2, just days before the surprise attack by Hamas. The authors of the study believe that there may be more trading activity that went unnoticed due to limited public trading data. They urge regulators to investigate further.
It is important to note that the researchers do not directly link this trading activity to Hamas. They acknowledge that there are various possibilities, including the potential that someone “overheard something” and acted on it.
In response to the study, the Tel Aviv Stock Exchange (TASE) and the Israel Securities Authority (ISA) have disputed the claims. TASE argues that the authors miscalculated the potential short sale profit, while ISA states that no significant trading abnormalities were detected in the days preceding the terrorist attack.
Despite the differing opinions, the researchers stand by their findings, describing the trading activity as exceptional and extraordinary compared to a decade of trading. They believe that there is more to uncover and call on regulators to delve deeper into the matter.
