Second in a series

Read Part I

This paper will review the evidence for informed, or insider, trading in the days and hours before the 9/11 attacks. From the very first, the phenomenon appeared to be world-wide.  One consultant, Jonathan Winer, told ABC: “it’s absolutely unprecedented to see cases of insider trading covering the entire world from Japan to the US to North America to Europe.”[1] The list of affected nations was long, and included the US, Germany, Japan, France Luxembourg, Hong Kong, the UK, Switzerland and Spain.[2] Soon, independent investigations were underway on three continents in the belief that the paper trail would lead to the terrorists.

Press statements by leading figures in the international banking community left little doubt that the evidence was compelling. Ernst Welteke, President of the German Deutsche Bundesbank, told reporters that “a preliminary review by German regulators and bank researchers showed there were highly suspicious sales of shares in airlines and insurance companies, along with major trades in gold and oil markets, before September 11 that suggest….advance knowledge of the attacks. Welteke said that his researchers came across….almost irrefutable proof of insider trading.”  Welteke was blunt: “What we found makes us sure that people connected to the terrorists must have been trying to profit from this tragedy.”[3]

In the U.K., London City regulators investigated a flurry of suspicious sales processed just before the attack.[4] “The Financial Services Authority (FSA), a stock market watchdog, was drawn into the investigation because it had a transaction monitoring department that checks suspicious share movements.” An FSA spokesperson confirmed that market regulators in Germany, Japan and the U.S. had received information about short selling of insurance company shares and airline stocks, which fell sharply as a result of the attacks. Among the WTC tenants were dozens of banks and insurance companies, including several that were now going to have to pay out billions to cover heavy losses from the attacks.[5]

Assuming nefarious individuals were armed with foreknowledge, they stood to make a windfall by dumping stock and selling competitors short, not to mention the vast potential profits from last-minute electronic money laundering via computers which, the perpetrators had to know, would be destroyed within hours. Richard Crossley, a London analyst, stated that he had tracked suspicious short selling and share dumping in a swath of stocks. CBS likewise reported a sharp upsurge in purchases of put options on both United and American Airlines.[6] The uptick had occurred in the days prior to 9/11. A put option is a contract that allows the holder to sell a stock at a specified price, within a certain time period. Sources on Wall Street told CBS that before 9/11 they had never seen that kind of trading imbalance. The only airlines affected were United and American, the two involved in the attack. American Airlines stock reportedly fell 39% in a single day. United Airlines stock dropped even more, by a whopping 44%.

Although many stocks tumbled, there were also big winners, especially in the military sector. Contractors like L-3 Communications, Allied Techsystems and Northrop Grumman all reported large gains.[7] The biggest winner, though, was Raytheon, which manufactures Tomahawk missiles. During the week following the 9/11 attacks, Raytheon stock climbed by an astounding 37%.[8] Prior to 9/11, the purchase of call options (a contract to buy a stock at a certain price) for Raytheon had suspiciously surged by 600%.

The sale of five-year U.S. Treasury Notes also spiked just before 9/11, as reported by the Wall Street Journal.[9] Among the purchases was a single $5 billion transaction, which pointed to large investors. The Journal explained that “Treasury notes are among the best investments in the event of a world crisis, especially one that hits the US. The notes are prized for their safety and their backing by the U.S. government, and usually rally when investors flee riskier investments, such as stocks.” Michael Shamosh, a bond-market strategist for Tucker Anthony Inc., told the Journal:  “If they were going to do something like this they would do it in the five-year part of the market. [Because] It’s extremely liquid, and the tracks would be hard to spot.” The article added that “The value of these notes has risen sharply since the events of September 11.”

The Securities and Exchange Commission (SEC) launched its own probe into allegations of insider trading. For weeks, the SEC remained close-mouthed about the scope of its investigation, then, in mid-October, sent out a request to securities firms around the world for more information regarding a list of 38 different stocks.[10] SEC Chairman Harvey Pitt told the House Financial Services Committee that “We will do everything in our power to track those people down and bring them to justice.”[11] By this time, however, the fix was in.

The San Francisco Chronicle reported that the SEC took the unprecedented step of deputizing “hundreds, if not thousands, of key players in the private sector.”[12] Wrote the Chronicle: “In a two-page statement issued to ‘all securities-related entities’ nationwide, the SEC asked companies to designate senior personnel who appreciate ‘the sensitive nature’ of the case and can be relied upon to ‘exercise appropriate discretion’ as ‘point’ people linking government investigators and the industry.” The requested information was to be held in strictest confidence. The SEC statement included the following passage (emphasis added): “We ask that you disseminate the information within your institution only on a need-to-know basis.”

In his book “Crossing the Rubicon”, former LAPD detective Mike Ruppert explains the SEC’s unprecedented move to deputize:

What happens when you deputize someone in a national security or criminal investigation is that you make it illegal for them to disclose publicly what they know…. In effect, they become government agents and are controlled by government regulations rather than their own conscience. In fact, they can be thrown in jail without a hearing if they talk publicly. I have seen this implied threat time and again with federal investigations, intelligence agents, and even members of the United States Congress who are bound so tightly by secrecy oaths and agreements that they are not even able to disclose criminal activities inside the government for fear of incarceration.[13]

Notice, this surely means that Al Qaeda had nothing to do with the insider trading.[14] When the evidentiary trail led back to Wall Street, the SEC moved quickly to control the evidence and muzzle potential witnesses. Despite the best efforts of the SEC, a few details did leak to the world press. In mid-October 2001, The Independent (UK) reported that, “To the embarrassment of investigators, it has….emerged that the firm used to buy many of the ‘put’ options (where a trader, in effect, bets on a share price fall) on United Airlines stock was headed until 1998 by Alvin ‘Buzzy’ Krongard, now executive director of the CIA.”[15] The evidence was all the more incriminating, because in at least one case the purchaser failed to collect a reported $2.5 million in profits made from the collapsing share price of UAL stock. The only plausible explanation was that someone at the purchasing bank feared exposure and subsequent arrest.

For the most part, the U.S. press failed to pick up the story, which clearly linked Wall Street and the U.S. intelligence community to the 9/11 attacks. Indeed, the New York Times cooperated with the cover-up.[16] George Tenet writes in his memoirs that he recruited Buzzy Krongard in 1998 to become his deputy at CIA, probably to serve as Tenet’s personal liaison to Wall Street.[17] Until 1997, Krongard was chairman of Alex Brown Inc., America’s oldest investment banking firm. Alex Brown was acquired by Bankers Trust in 1997, which, in turn, was purchased by Deutsche Bank in 1999. In the mid-1990s, Krongard had served as a consultant to CIA director James Woolsey.

In 1998, Banker’s Trust-Alex Brown refused to cooperate with a Senate subcommittee which, at the time, was conducting hearings on the involvement of U.S. banks in money laundering activities.[18] At the time, Banker’s Trust, like other large U.S. banks, was in the business of private banking. This means that Banker’s Trust catered to unnamed wealthy clients for the purpose of setting up shell companies in foreign jurisdictions, such as on the Isle of Jersey, where effective bank regulation and oversight are nonexistent. According to Ruppert, Krongard’s last job at Alex Brown was to oversee “private client relations.”[19] This means that Krongard personally arranged confidential transactions and transfers for the bank’s unnamed wealthy clientele.

Private banks typically offer a range of services to their clients for the purpose of shielding them from oversight. Private banks set up multiple offshore accounts in multiple locations under multiple names. They also facilitate the quick, confidential and hard-to-trace transfer of money across jurisdictional boundaries. In many such cases, the private banks do not even know who owns the account; which, of course, means that not even the bankers can follow the transactions with “due diligence.” Many private banks do not even try, for fear of scaring away business, especially from foreign clients. Even though private bankers are responsible for enforcing legal controls against money laundering, where such laws exist, in practice, oversight is typically weak or nonexistent. I was shocked to learn that although it is illegal for U.S. banks to launder ill-gotten money that originates within the United States, it is not illegal for them to accept dirty money from elsewhere. No surprise then, that many U.S. banks openly solicit business from Central American drug lords, arms merchants, and other shady entities.

For these reasons, it is little wonder that over the last several decades, law enforcement has failed to stem the growing international flood of laundered drug money and other illicit assets. Their failure has been spectacular. In 1999, a consensus of experts in Germany, Switzerland and at the U.S. Treasury agreed that 99.9% of laundered money routinely escapes detection. The experts estimated that the annual total was between $500 billion and a trillion dollars, a mind-boggling number, about half of which is washed into the U.S. economy, the rest into Europe.[20]

After “Buzzy” Krongard’s departure to the CIA, his successor at Alex Brown was his former deputy Mayo Shattuck III, who had worked at the bank for many years. In 1997, Shattuck helped Krongard engineer the merger with Banker’s Trust, and he stayed on after Deutsche Bank acquired Bankers Trust – Alex Brown in 1999.[21]

According to the New York Times, Bankers Trust was “one of the most loosely managed [banks] on Wall Street,” and during the 1990s was repeatedly rocked by scandal. In 1994, clients and regulators accused the bank “of misleading customers about its risky derivative products.” The case went viral when tape recordings were made public that showed bank salesmen snickering about ripping off naive customers. In 1999, Banker’s Trust pled guilty to criminal conspiracy charges, after it was revealed that top-level executives had created a slush fund out of at least $20 million in unclaimed funds.[22] Bankers Trust had to pay a $63 million fine and would have been forced to close it doors but for the fact it was acquired, just at this time, by Deutsche Bank, Europe’s largest bank.

According to the New York Times, Mayo Shattuck III “was made co-head of investment banking in January [2001], overseeing Deutsche Bank’s 400 brokers who cater to wealthy clients.”[23] It is curious that Shattuck resigned immediately after the 9/11 attacks.

In a footnote buried on page 499, the 9/11 Commission Report alludes to Mayo Shattuck III’s likely role in purchasing the United Airlines put options just prior to 9/11. The note fails to mention Shattuck and Deutsche Bank by name, but attempts to explain away the charges of insider trading, as follows:

A single US-based institutional investor with no conceivable ties to al Qaeda purchased 95% of the UAL puts on September 6 [2001] as part of a strategy that also included buying 115,000 shares of American on September 10. Similarly, much of the seemingly suspicious trading on September 10 was traced to a specific US-based options trading newsletter….which recommended these trades.[24]

Evidently, we are supposed to conclude that “American” means American Airlines. But here it could just as easily refer to American Express. If Deutsche Bank’s pre-9/11 trading was truly hedged, as the 9/11 Commission Report contends in the footnote, then it would not meet the definition of informed or insider trading. However, without more information, it is not possible to confirm or refute the facts in this particular case. Still, the commission’s token explanation is not convincing. Two statistical studies since published reported an unusual volume in options trading for both United and American airlines in the days before 9/11. The author of the first study wrote that the results are “consistent with investors trading on advance knowledge of the attacks.”[25] The second paper, by the Swiss Banking Institute, reached the same conclusion.[26] A third study looked at the Standard & Poor’s 500 Index (SPX index options) and found “abnormal trading volumes in September 2001 OTM, ATM and ITM SPX index put options, and September 2001 ITM SPX index call options.” The authors concluded that there is “credible circumstantial evidence to support the insider trading claim.”[27]

Notice also, the commission makes no mention in its footnote of the 36 other companies identified by the SEC in its insider trading probe. What about the pre-9/11 surge in call options for Raytheon, for instance, or the spike in put options for the behemoth Morgan Stanley, which had offices in WTC 2? The 9/11 Commission Report offers not one word of explanation about any of this. The truth, we must conclude, is to be found between the lines in the report’s conspicuous avoidance of the lion’s share of the insider trading issue. Indeed, if the trading was truly “innocuous,” as the report states, then why did the SEC muzzle potential whistleblowers by deputizing everyone involved with its investigation? The likely answer is that so many players on Wall Street were involved that the SEC could not risk an open process, for fear of exposing the unthinkable. This would explain why the SEC limited the flow of information to those with a “need to know,” which, of course, means that very few participants in the SEC investigation had the full picture. It would also explain why the SEC ultimately named no names. All of which hints at the true and frightening extent of criminal activity on Wall Street in the days and hours before 9/11. The SEC was like a surgeon who opens a patient on the operating room table to remove a tumor, only to sew him back up again after finding that the cancer has metastasized through the system.

At an early stage of its investigation, perhaps before SEC officials were fully aware of the implications, the SEC did recommend that the FBI investigate two suspicious transactions. We know about this thanks to a 9/11 Commission memorandum declassified in May 2009 which summarizes an August 2003 meeting at which FBI agents briefed the commission on the insider trading issue. The document indicates that the SEC passed the information about the suspicious trading to the FBI on September 21, 2001, just ten days after the 9/11 attacks.[28]

Although the names in both cases are censored from the declassified document, thanks to some nice detective work by Kevin Ryan we know whom (in one case) the SEC was referring to.[29] The identity of the suspicious trader is a stunner that should have become prime-time news on every network, world-wide. Kevin Ryan was able to fill in the blanks because, fortunately, the censor left enough details in the document to identify the suspicious party who, as it turns out, was none other than Wirt Walker III, a distant cousin to then-President G.W. Bush. Several days before 9/11, Walker and his wife Sally purchased 56,000 shares of stock in Stratesec, one of the companies that provided security at the World Trade Center up until the day of the attacks. Notably, Stratesec also provided security at Dulles International Airport, where AA 77 took off on 9/11, and also security for United Airlines, which owned two of the other three allegedly hijacked aircraft. At the time, Walker was a director of Stratesec. Amazingly, Bush’s brother Marvin was also on the board. Walker’s investment paid off handsomely, gaining $50,000 in value in a matter of a few days. Given the links to the World Trade Center and the Bush family, the SEC lead should have sparked an intensive FBI investigation. Yet, incredibly, in a mind-boggling example of criminal malfeasance, the FBI concluded that because Walker and his wife had “no ties to terrorism … there was no reason to pursue the investigation.” The FBI did not conduct a single interview.

The 9/11 Commission Report also fails to mention the other compelling evidence for insider trading that I have not yet discussed, namely, the approximately 400 computer hard drives found by workmen in the ruins of the WTC. According to Reuters and CNN, in the period after 9/11, U.S. credit card, telecommunications and accounting firms hired a German company named Convar to recoup data from the damaged hard drives.[30] Convar got the contract because, two years before, it had developed a proprietary method for recovering data using a cutting edge laser scanning technology. Peter Wagner, a Convar spokesman, told CNN that the new laser process makes it “possible to read the individual drive surfaces and then create a virtual drive.” As of December 2001, Convar had examined 39 hard drives and in most cases succeeded in recovering 100% of the data. The company was specifically searching for encryption keys, indicating a financial record. Convar found evidence stored on the drives of “an unexplained surge in transactions prior to the attacks.” Convar director Peter Henschel told CNN that “unusually large sums of money, perhaps more than $100 million, were rushed through the computers as the disaster unfolded. Said Henschel: “The suspicion is that insider information about the attack was used to send financial transaction commands and authorizations in the belief that amidst all the chaos the criminals would have a good head start…..Of course it’s possible that Americans went on an absolute shopping binge, that Tuesday morning. But at this point there are many transactions that cannot be accounted for.” After the initial story by CNN and Reuters, the issue of the WTC hard drives disappeared from the news, and nothing has been heard since. Although reports on the Internet that Kroll purchased Convar remain unsubstantiated, it is nonetheless clear that someone made the story (and the evidence) go away.[31] But what reason would they possibly have for doing so? Unless the initial indications from Convar that insider trading had occurred were correct.

The above CNN quote by Peter Henschel that “unusually large sums of money, perhaps more than $100 million, were rushed through the computers as the disaster unfolded,” was later confirmed in truly chilling fashion by a Deutsche Bank New York branch employee who survived the attacks. The whistleblower, who insists on remaining anonymous for his own protection, told Mike Ruppert that “about five minutes before the attack the entire Deutsche Bank computer system had been taken over by something external that no one in the office recognized, and every file was downloaded at lightning speed to an unknown location” (emphasis added).[32] Here, the important phrase is “five minutes before the attack.” Chilling indeed.

To be continued…


[1] World News Tonight, 20 September 2001.

[2] Dave Eberhart, “Still Silence From 9-11 Stock Speculation Probe”, NewsMax, June 3, 2002,

[3] William Drozdiak, “‘Insider trading’ by terrorists is suspected in Europe”, Miami Herald, September 24, 2001,

[4] James Doran, “Insider Trading Apparently Based on Foreknowledge of 9/11 Attacks,” London Times, September 18, 2001. Archived at

[5] Christian Berthelsen, Scott Winokur, “Suspicious profits sit uncollected,” San Francisco Chronicle, September 29, 2001. Archived at

[6] “Profiting from Disaster,” CBS Evening News, September 19, 2001. Archived at

[7] Michelle Ciarrocca, “Post-9/11 Economic Windfalls for Arms Manufacturers,” Foreign Policy in Focus, September 2002. Posted at

[8] Bank of America among 38 stocks in SEC’s attack probe,” Bloomberg News, October 3, 2001. Archived at

[9] Cited by Barry Grey, “Suspicious trading points to advance knowledge by big investors of September 11 attacks,” World Socialist Web Site, October 5, 2001. Posted at

[10] Bloomberg News, October 3, 2001. The list included stocks of American, United, Continental, Northwest, Southwest and US Airways airlines, as well as Martin, Boeing, Lockheed Martin Corp., AIG, American Express Corp, American International Group, AMR Corporation, Axa SA, Bank of America Corp, Bank of New York Corp, Bank One Corp, Cigna Group, CNA Financial, Carnival Corp, Chubb Group, John Hancock Financial Services, Hercules Inc, L-3 Communications Holdings, Inc., LTV Corporation, Marsh & McLennan Cos. Inc., MetLife, Progressive Corp., General Motors, Raytheon, W.R. Grace, Royal Caribbean Cruises, Ltd., Lone Star Technologies, American Express, the Citigroup Inc. ,Royal & Sun Alliance, Lehman Brothers Holdings, Inc., Vornado Reality Trust, Morgan Stanley, Dean Witter & Co., XL Capital Ltd., and Bear Stearns.

[11] Erin E. Arvedlund, “Follow The Money: Terrorist Conspirators Could Have Profited More From Fall Of Entire Market Than Single Stocks,” Barron’s (Dow Jones and Company), 6 October 2001.

[12] Scott Winokur, “SEC wants data-sharing system,” San Francisco Chronicle, October 19, 2001. Posted at

[13] Michael Ruppert, Crossing the Rubicon,(New Society Publishers, 2004), p. 243.

[14] Bloomberg reportedly acknowledged the fact in a September 2003 newswire. Although the wire has since disappeared from the Internet, the text is archived at

[15] Chris Blackhurst, “Mystery of terror ‘insider dealers’,” The Independent, October 14, 2001, posted at

[16] “Whether advance knowledge of U.S. attacks was used for profit,” New York Times, October 1, 2001. Archived at

[17] George Tenet, At the Center of the Storm, Harper Collins, New York,  2007, p. 19.

[18] Hearings before the Permanent Subcommittee on Investigations, 106th Congress, November 9 and 10, 1999, p.879. Posted at

[20] Raymond W. Baker, “The Biggest Loophole in the Free Market System,” The Washington Quarterly, Autumn 1999, p. 29. Posted at (see p. 1061)

[21] “Chief Steps Down At Alex Brown,” New York Times, September 15, 2001.

[22] Timothy L. O’Brien, “The Deep Slush at Bankers Trust,” The New York Times, May 30, 1999. Posted at

[23] “Chief Steps Down At Alex Brown,” New York Times, September 15, 2001.

[24] 9/11 Commission Report, W.W. Norton, 2004, p. 499.

[25] Allen M. Poteshman, “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001,” The Journal of Business, 2006, vol. 79, no. 4,

[26] Marc Chesney, et al, “Detecting Informed Trading Activities in the Options Markets,” Social Sciences Research Network, 13 January 2010,

[27] Wing-Keung Wong, et al, “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?,” Social Sciences Research Network, April 2010,

[28] 9/11 Commission memorandum entitled “FBI Briefing on Trading”, prepared by Doug Greenburg, 18 August 2003, p. 4-5. Posted at

[29] Kevin Ryan, “Evidence for Informed Trading on the Attacks of September 11,” Foreign Policy Journal, November 18, 2010. Posted at

[30] “German firm probes final World Trade Center deals,” Reuters, December 17, 2001. Posted at

Rick Perera, “Computer disk drives from WTC could yield clues,” CNN, December 20, 2001. Posted at

[31] Michael Fury, “The Ghost in the Machines: Evidence of Foreknowledge in the WTC Hard Drive Recoveries,” Journal of 9/11 Studies, December 2008. Posted at

[32] Crossing the Rubicon, p. 244.