Bin Laden Stock Deals Possible, Says Market Expert
July 7, 2008 - 7:10 PM
London (CNSNews.com) - While inquiries into stock trades executed in advance of last week's attacks on Washington and New York continued Wednesday, a leading expert on securities said that Osama bin Laden's estimated personal fortune would be enough to move the price of individual stocks, if put into high-risk derivatives markets.
Investigations have begun in several countries into unusual share price moments in the days and hours leading up to last Tuesday's attack. U.S. authorities have suggested that bin Laden supporters tried to profit by placing "short sells" - effectively, wagers that the price of a stock will go down - on stocks likely to be adversely affected by the attacks.
Professor Charles Goodhart of the London School of Economics said that while such transactions are traceable, it may be difficult to link them directly with bin Laden.
"Orders have to come from somewhere and money has to come from somewhere," Goodhart told CNSNews.com . "While I'm sure Osama bin Laden didn't walk into a brokerage and say 'I'd like to place a large short sell order on American Airlines,' there are ways of tracking these things - there will be a paper trail. But how far back the authorities can trace the trail is a different matter altogether."
President Bush and other western leaders have pledged to use a variety of methods, including economic means, to combat terrorism.
British Chancellor (Treasury Secretary) Gordon Brown said that one British bank account was frozen Tuesday after investigations into last week's atrocities.
"We want joint action to cut off the supply of funds to terrorists. They are being financed somewhere and get their money through bank accounts which we can stop," Brown said.
Britain is calling for the Financial Action Task Force, a global watchdog, to press all countries to report transactions by suspected terrorists, even when the money comes from legitimate sources.
The U.K. Financial Services Authority - the British equivalent of the SEC - refused to comment Wednesday on a possible investigation into irregularities on the London Stock Exchange.
Germany's financial oversight ministry, BaWe, said it had launched a probe into "suspect" share movements in the run up to the attacks.
Attention has been focused on the world's biggest reinsurance company, Munich Re. Munich Re stock has shed a fifth of its value in the past two months.
Reinsurance companies provide coverage for losses by insurers. Analysts say they are "defensive stocks" that would be expected to keep value in a declining market.
The stock prices of reinsurers Swiss Re and France's Axa also lost ground in the run up to last Tuesday's attacks.
Investigations are also underway in Italy, Switzerland and Japan.
Bin Laden is estimated to control about $300 million of his family's fortune, but estimates of assets available to his supporters vary widely.
The news of possible share dealing by terrorists has led to calls for greater transparency on world markets. But Goodhart said attempts have already been made to tighten rules on financial transactions, to little avail.
"When you talk about keeping tabs on transactions, this is the sort of thing people have been trying to do with for years, in order to try to control money laundering and drug barons," Goodhart said. "I suspect that the things that could be done in this area were already being done, long before the attacks."