SEC Releases List of Suspect Trades

Link is Sought to Sept. 11 Attacks

The Associated Press
WASHINGTON — The [U.S.] government says it is investigating suspicious trading in 38 companies, including major airlines, cruise lines, General Motors Corp., and Raytheon Co., to determine if people used advance knowledge of the terror attacks last month to profit from trading in the companies' shares.

The Securities and Exchange Commission list includes several big companies that were tenants in the collapsed twin towers in the heart of New York's financial district: investment firms Morgan Stanley Dean Witter, the complex's biggest occupant, and Lehman Brothers; Bank of America; and the financial firm Marsh & McLennan.

Also among the companies named are the parents of major airlines American, Continental, Delta, Northwest, Southwest, United and US Airways, as well as the cruise lines Carnival and Royal Caribbean, the aircraft maker Boeing and the 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. In addition, American Express, Bank of New York, Bank One, Bear Stearns, Citigroup, Hercules, L-3 Communications Holdings, LTV Corp., Lone Star Technologies, Progressive Corp., Royal & Sun Alliance, XL Capital and W.R. Grace were named.

The commission has not previously disclosed details of its investigation, part of a worldwide inquiry into advance trading by individuals linked to the terrorists. The agency's list of 38 companies was posted Monday [2001-10-01] on the Web site of the Investment Dealers Association of Canada, which represents that country's securities firms.

The Securities commission has asked U.S. and Canadian brokerage and investment firm to review their records for trading in the stocks to find any unusual patterns in the weeks leading up to Sept. 11, the day hijackers slammed planes into the World Trade Center and the Pentagon, killing thousands.

Several days before the attacks, there was unusually heavy trading in airline and related stocks using a market tactic that essentially bets that a stock will decline in value.

Alex Popovic, vice president of enforcement for the dealers' group, said the agency asked brokerages to concentrate on stocks on the list, but not to limit their review.

This article appeared in the International Herald Tribune, 2001-10-04.

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