Study finds Hamas may have profited from Oct. 7 assault with advance stock market trades

A recent study finds that the Hamas terror group may have tried to profit off its October 7 assault on Israel, using advance knowledge of the attack to short sell Israeli companies in the days leading up to the massacre.

The study published in the SSRN journal by Robert J. Jackson, Jr. from the New York University School of Law and Joshua Mitts of Columbia Law School finds that traders who apparently had advance knowledge made billions of dollars.

“We document a significant spike in short selling in the principal Israeli-company ETF days before the October 7 Hamas attack,” the paper says.

“The short selling that day far exceeded the short selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the COVID-19 pandemic. Similarly, we identify increases in short selling before the attack in dozens of Israeli companies traded in Tel Aviv,” it notes.

Short selling is when a trader borrows shares in a specific company and then sells them, hoping the price will fall after so they can buy them back for a lower price.

“For one Israeli company alone, 4.43 million new shares sold short over the September 14 to October 5 period yielded profits (or avoided losses) of 3.2 billion NIS ($740 million) on that additional short selling,” the paper says.

“Although we see no aggregate increase in shorting of Israeli companies on US exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks,” it added.