Swiss join worldwide probes at stock exchanges

A formal investigation into possible insider dealing has been launched in Switzerland Keystone Archive

Switzerland has joined financial market regulators around the world in exchanging information surrounding last week's terror attacks in the United States. They are investigating if the organisers of the attacks tried to profit by selling shares or stock options before the event.

Regulators from 10 to 12 countries are trying to establish if trading took place with prior knowledge of the attacks, by analysing trading patterns leading up to last Tuesday.

“We don’t have any evidence, only the public speculation,” said Urs Zulauf, chief legal expert of the Swiss Federal Banking Commission. “But the matter is serious enough that we wanted to become active.”

Reports say there is a suspicion that individuals or groups linked to the United States’ prime suspect, Osama bin Laden, profited from short selling shares in airlines and insurance companies before the attacks to take advantage of windfall profits.

Short selling involves investors borrowing securities, selling them and then buying them for a cheaper price; the short seller then pays back the securities and makes a profit on the difference.

The Chicago Board Options Exchange said on Tuesday it was investigating options activity before the attacks, while traders in Amsterdam said there was unusually active trading in options of the Netherlands national airline, KLM.

Investigation into trading

“As is usual, we are conducting an investigation of trading prior to the news events,” said a spokeswoman in Chicago, home of the world’s largest options exchange.

However, she declined to elaborate on which stock options were the focus of attention.

Dutch traders said they had alerted the Euronext stock market to unusually large volume trading in “put options” on shares in KLM before the attacks. Put options give investors the right to sell a stock at a specific price.

The investigations extend to Asia, where the Hong Kong Monetary Authority has asked banks to check out any accounts that may show signs of money laundering or any connection to bin Laden-related groups.

The Tokyo stock exchange in Japan has also said it is investigating the possibility that transactions had taken place on the bourse which were linked to bin Laden.

A board member of the Swiss stock exchange in Zurich, Ettore Candolfi, has told the Swiss media that an initial investigation revealed a number of unusually large trades in the Swiss Reinsurance Company of up to 16,000 shares four days before the attacks.