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On September 19, 2001, CBS reported:

Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market.



An extraordinary number of trades were betting that American Airlines stock price would fall.



The trades are called "puts" and they involved at least 450,000 shares of American. But what raised the red flag is more than 80 percent of the orders were "puts", far outnumbering "call" options, those betting the stock would rise.



Sources say they have never seen that kind of imbalance before, reports CBS News Correspondent Sharyl Attkisson. Normally the numbers are fairly even.



After the terrorist attacks, American Airline stock price did fall obviously by 39 percent, and according to sources, that translated into well over $5 million total profit for the person or persons who bet the stock would fall.



***



At least one Wall Street firm reported their suspicions about this activity to the SEC shortly after the attack.



The same thing happened with United Airlines on the Chicago Board Options Exchange four days before the attack. An extremely unbalanced number of trades betting United's stock price would fall — also transformed into huge profits when it did after the hijackings.



"We can directly work backwards from a trade on the floor of the Chicago Board Options Exchange. The trader is linked to a brokerage firm. The brokerage firm received the order to buy that 'put' option from either someone within a brokerage firm speculating, or from one of the customers," said Randall Dodd of the Economic Strategy Institute.



U.S. investigators want to know whether Osama bin Laden was the ultimate "inside trader" — profiting from a tragedy he's suspected of masterminding to finance his operation. Authorities are also investigating possibly suspicious trading in Germany, Switzerland, Italy and Japan.



On September 29, 2001, the San Francisco Chronicle pointed out:

"Usually, if someone has a windfall like that, you take the money and run," said the source, who spoke on condition of anonymity. "Whoever did this thought the exchange would not be closed for four days. "This smells real bad." *** There was an unusually large jump in purchases of put options on the stocks of UAL Corp. and AMR Corp. in the three business days before the attack on major options exchanges in the United States. On one day, UAL put option purchases were 25 times greater than the year-to-date average. In the month before the attacks, short sales jumped by 40 percent for UAL and 20 percent for American. ***



Spokesmen for British securities regulators and the AXA Group also confirmed yesterday that investigations are continuing. The source familiar with the United trades identified Deutsche Banc Alex. Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of the options. ***



Last weekend, German central bank president Ernst Welteke said a study pointed to "terrorism insider trading" in those stocks.

The Chronicle illustrated the story with the following chart:



On October 19, 2001, the Chronicle wrote:

On Oct. 2, Canadian securities officials confirmed that the SEC privately had asked North American investment firms to review their records for evidence of trading activity in the shares of 38 companies, suggesting that some buyers and sellers might have had advance knowledge of the attacks.

***

FMR Corp. spokeswoman Anne Crowley, said her firm -- which owns the giant Fidelity family of mutual funds in Boston -- has already provided "account and transaction" information to investigators, and had no objection to the new procedures announced yesterday. Crowley declined to describe the nature of the information previously shared with the government.

So the effort to track down the source of the puts was certainly quite substantial.



What were the results and details of the investigation?



Apparently, we'll never know.



Specifically, David Callahan - executive editor of SmartCEO - submitted a Freedom of Information Act request to the SEC regarding the pre-9/11 put options.



The SEC responded:

This letter is in response to your request seeking access to and copies of the documentary evidence referred to in footnote 130 of Chapter 5 of the September 11 (9/11) Commission Report.



***



We have been advised that the potentially responsive records have been destroyed.

If the SEC had responded by producing documents showing that the pre-9/11 put options had an innocent explanation (such as a hedge made by a smaller airline), that would be understandable.



If the SEC had responded by saying that the documents were classified as somehow protecting proprietary financial information, I wouldn't like it, but I would at least understand the argument.



But destroyed? Why? (See Afterword for additional details.)



Not the First Time



This is not the first destruction of documentary evidence related to 9/11.



I wrote in March:

We don't need to even discuss conspiracy theories about what happened on 9/11 to be incredibly disturbed about what happened after: the government's obstructions of justice.



Indeed, the 9/11 Commissioners themselves are disturbed:

The Commission's co-chairs said that the CIA (and likely the White House) "obstructed our investigation"

9/11 Commissioner Timothy Roemer said "We were extremely frustrated with the false statements we were getting"



The Senior Counsel to the 9/11 Commission (John Farmer) - who led the 9/11 staff's inquiry - said " At some level of the government, at some point in time...there was an agreement not to tell the truth about what happened ". He also said "I was shocked at how different the truth was from the way it was described .... The tapes told a radically different story from what had been told to us and the public for two years.... This is not spin. This is not true."

Afterword: Footnote 130 to chapter 5 of the official 9/11 Commission Report states:

Highly publicized allegations of insider trading in advance of 9/11 generally rest on reports of unusual pre-9/11 trading activity in companies whose stock plummeted after the attacks. Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation. For example, the volume of put options- investments that pay off only when a stock drops in price-surged in the parent companies of United Airlines on September 6 and American Airlines on September 10-highly suspicious trading on its face. Yet, further investigation has revealed that the trading had no connection with 9/11. A single U.S.-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10. Similarly, much of the seemingly suspicious trading in American on September 10 was traced to a specific U.S.-based options trading newsletter, faxed to its subscribers on Sunday, September 9, which recommended these trades. These examples typify the evidence examined by the investigation. The SEC and the FBI, aided by other agencies and the securities industry, devoted enormous resources to investigating this issue, including securing the cooperation of many foreign governments. These investigators have found that the apparently suspicious consistently proved innocuous. Joseph Cella interview (Sept. 16, 2003; May 7, 2004; May 10-11, 2004); FBI briefing (Aug. 15, 2003); SEC memo, Division of Enforcement to SEC Chair and Commissioners, "Pre-September 11, 2001 Trading Review," May 15, 2002; Ken Breen interview (Apr. 23, 2004); Ed G. interview (Feb. 3, 2004).

Did the Commission have full access to information regarding put options? Was the Commission misled, as it was on other issues? Was evidence destroyed or fabricated? We will never know, as the underlying documents have - according to the SEC - been destroyed.