Suspicious short-selling occurred days before Hamas attack that sparked Israel-Gaza war: research report

Unknown stocks traders were betting against Israeli companies just days before the Oct. 7 attack by Hamas, according to new financial research.

New York University law professor and former Securities and Exchange Commissioner (SEC) Robert Jackson, Jr. and Columbia University law professor Joshua Mitts found that suspicious trading took place not only ahead of the Oct. 7 attack, but also ahead of an earlier date planned for the attack back in April, as reported by Israeli media.

“Our evidence is consistent with informed traders anticipating and profiting from the Hamas attack,” Jackson and Mitts wrote, after analyzing short-selling volume data on Israeli stocks and stock groupings, known as exchange-traded funds (ETFs).

Short-sellers pay a fee to borrow shares of a company they expect to fall in value. The traders sell the borrowed shares immediately before buying them back at the lower price and returning them to the broker, pocketing the difference as a profit.

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

Short-selling volumes also spiked on a major Israeli ETF called EIS just days before the eve of Passover, when the Hamas attack had originally been planned to take place, according Israeli media.

“As noted previously, short volume in EIS peaked on April 3 at levels very similar to those observed on October 2, and was far higher (by an order of magnitude) than other days prior to April 3,” the researchers said.

The identity of the traders was not specified in the research, which was based on trading volume data from financial company Blackrock.

The Guardian reported that the matter is under investigation by Israel Securities Authority (ISA), which is the equivalent of the SEC.

Asked by The Hill for a statement on the research findings, ISA head of public inquiries Galit Cohen acknowledged receipt of the request but did not provide any additional information.

The New York Times reported last week that Israeli authorities knew about the Hamas attack plan for more than a year before it took place but had dismissed it as too difficult to execute. 

The paper, which reviewed a translated document describing the attack, said that the plan had been carried out by Hamas “with shocking precision.”

More than 16,200 people have been killed in Gaza since the Oct. 7 attack, according to the Palestinian news agency Wafa. The United Nations humanitarian affairs agency put the number Tuesday at 16,248, with more than 1,550 families with multiple fatalities. Around 1.93 million people in Gaza have been internally displaced, or 78 percent of the total population.

Around 1,200 Israelis and foreign nationals were killed in the initial attack by Hamas, according to multiple sources. About 160 Israeli and foreign national hostages remain held by Hamas, NPR reported at the end of November.