$2.5 M windfall uncollected

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Report: $2.5 M windfall uncollected

Click for complete story Saturday, 29 September 2001 17:51 (ET)

Report: $2.5 M windfall uncollected

SAN FRANCISCO, Sept. 29 (UPI) -- A spike in lucrative stock option trades involving United Airlines around Sept. 11 has raised the suspicions of investigators combing the equities markets for a paper trail that someone knew in advance four U.S. airliners were about to be hijacked by terrorists.

The San Francisco Chronicle said Saturday that, according to sources, investors have not claimed more than $2.5 million in windfall profits made in options trading on United stock, which lost two airliners, one in the attack New York and one that crashed in Somerset County, Pennsylvania.

"Usually, if someone has a windfall like that, you take the money and run," an anonymous source told the Chronicle. "Whoever did this thought the exchange would not be closed for four days."

"This smells real bad," the source said.

The Chronicle said sources in the financial community believe the traders may have planned on picking up their money in the confusion right after the crashes, but U.S. stock markets were shut down immediately and the traders may now fear their identities will be discovered if they attempt to collect their money.

Investigators around the world have been looking for unusual patterns of short selling and the purchase of "put" options that would be profitable if the company's stock price fell.

Analysts told the newspaper that while it was entirely possible savvy investors could have concluded selling short was a sound move due to the overall business climate for airlines, they noted the trading in put options for United and the parent of American Airlines during the days ahead of the strike were unusually heavy and did not involve other airlines.

The New York Times reported Friday many European authorities do not believe there is hard evidence insider trading connected to the U.S.'s No.1 suspect, Osama bin Laden, or another organization occurred, but U.S. authorities continue to investigate the possibility.

President Bush this week issued an executive order freezing the assets of 27 individuals and organizations deemed by the FBI to have terrorist ties.

The Securities and Exchange Commission had no immediate comment on the reports in the Times and Chronicle, but earlier this week the agency issued a memorandum to the securities industry asking they "voluntarily check their records for any relationships or transactions with the individuals and organizations named in the executive order or FBI's list."


-- Martin Thompson (mthom1927@aol.com), September 30, 2001

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