Oct 2, 2001
SEC Investigating Trading in Shares of 38 Companies; Asks Brokerages to Review Records
By Marcy Gordon
The Associated Press
WASHINGTON (AP) - The government is investigating trading in shares of 38 companies - including major airlines, cruise lines, General Motors and Raytheon - to determine if people with advance knowledge of the terror attacks used it to profit from stock and options trading.
The U.S. Securities and Exchange Commission has asked brokerage and investment firms in the United States and Canada to review their records for trading in the stocks to find any unusual patterns from Aug. 27 through Sept. 11, the day hijackers slammed planes into the World Trade Center towers and the Pentagon.
There was unusually heavy trading in airline and other affected stocks several days before the attacks, essentially betting on a coming decline in their value.
The SEC list also includes several big companies that were tenants in the collapsed buildings in the heart of New York's financial district: investment firms Morgan Stanley, the towers' biggest occupant, and Lehman Brothers; Bank of America; and financial firm Marsh & McLennan.
The SEC has not publicly disclosed any details of its investigation, part of a worldwide inquiry into possible advance trading by individuals linked to the terrorists. But the SEC's list of 38 companies was posted Monday on the Web site of the Investment Dealers Association of Canada, which represents that country's securities firms. The association sent a notice of the list to its approximately 190 member firms.
"These are the ... securities the United States Securities and Exchange Commission is investigating in the United States. We ask that you review same with a view of determining any unusual trading patterns," the Web site posting said.
Alex Popovic, vice president of enforcement for the dealers' group, said Tuesday that the SEC had asked brokerage firms to concentrate on the stocks on the list, but not to limit their review to the named companies.
"One shouldn't be wearing blinders when looking at that sort of thing," he said in a telephone interview from Toronto.
SEC spokesman John Heine had no immediate comment Tuesday.
SEC Chairman Harvey Pitt told Congress last week that the agency's "No. 1 priority" is to pursue its investigation of possible trading by people associated with the terrorists.
If such trading did occur, "We will do everything within our power to track those people down and bring them to justice," Pitt said in testimony to the House Financial Services Committee.
Government officials have acknowledged it can be difficult to trace such transactions to the individuals who originated them.
The 38 companies also include the parents of major airlines American, Continental, Delta, Northwest, Southwest, United and USAirways as well as cruise lines Carnival and Royal Caribbean, aircraft maker Boeing and defense contractor Lockheed Martin.
In the days before the terrorist assaults, unusually high numbers of put options were purchased for the stocks of AMR Corp. and UAL Corp., the parents of American and United - each of which had two planes hijacked. A put option is a contract that gives a holder the right to sell an asset at a specified price before a certain date.
Several insurance companies are on the list - American International Group, Axa, Chubb, Cigna, CNA Financial, John Hancock and MetLife.
Germany's stock market regulator has said it was looking into the possibility of suspicious short-selling of insurance company shares just before the terrorist attacks.
As with put options, investors who engage in short-selling are betting that the price of the stock will fall.
The list of companies also includes Vornado Realty Trust, a New Jersey-based firm that lost its bid earlier this year to lease the World Trade Center complex from the Port Authority of New York and New Jersey. The group that signed the $3.2 billion, 99-year lease in April was led by real estate developer Larry A. Silverstein and Westfield America Inc., which develops shopping centers.
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On the Net:
Securities and Exchange Commission: http://www.sec.gov
Investment Dealers Association of Canada: http://www.ida.ca **
[** I looked - couldn't find the list. --hobie **]
AP-ES-10-02-01 1607EDT
This story can be found at : http://ap.tbo.com/ap/breaking/MGAMSNN4CSC.html
