Thursday, July 21, 2005

Black Tuesday: (9/11/2001) The World's Largest Insider Trading Scam?

Black Tuesday:: "September 19, 2001
Black Tuesday:
The World's Largest Insider Trading Scam?

Don Radlauer
ICT Consultant

In the wake of the terrorist attacks which caused the destruction of the Twin Towers of New York's World Trade Center, damaged the Pentagon, and destroyed four large airliners with all aboard, securities-exchange investigators on three continents are poring over trading records to determine whether one or more parties profited by their advance knowledge of the disaster.

Investigations are focusing on the many different ways and places in which profits could be made following the Black Tuesday outrage. A brief introduction to 'left-handed trading' will help to clarify what may have happened.

Short Selling
Most investors buy stocks much the way they buy houses: They try to buy cheap and sell dear. Some traders, however, try to accomplish the same thing in reverse order -- when they think a stock will decrease in value, they sell the stock first, in the belief that they will be able to buy it back at a lower price later. This is known as short-selling. In order to sell a stock short, a trader must work with a stockbroker who will lend him/her the stock to sell; this is a normal service provided by stockbrokers. At least in theory, an investor can wait a long time before buying back the stock that s/he has sold ('covering the short').

Short-selling can be a highly successful trading strategy for an investor who knows how to time the market and can recognize overpriced stocks before the general public does. On the other hand, it can be highly risky: Since there is no upper limit to how high the stock being shorted can rise in price, the potential loss to the short-seller is infinite. On the other hand, the investor who shorts a stock with advance knowledge of news that will cause its price to drop precipitously can make a killing.

Derivatives - Options and Futures
'Derivatives' are investments that do not invol"

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