Israeli Stock Exchange Denies Claims of Hamas Profiting from Terrorist Attack

The Tel Aviv Stock Exchange (TASE) has responded to a report published by US law professors, Robert Jackson Jr. and Joshua Mitts, suggesting that Hamas terrorists may have profited from betting against Israel's economy prior to the deadly Oct. 7 attack. The report, titled "Trading on Terror?", claimed that there was significant short-selling of shares leading up to the attack, with profits of 3.2 billion shekels ($859 million) from the sale of 4.43 million shares of Leumi, Israel's largest bank. However, TASE disputed these figures, stating that the authors had miscalculated as share prices are listed in agorot, similar to cents and pence, not shekels. TASE argued that the potential short sale profit was actually 32 million shekels, or $8.6 million.

Yaniv Pagot, head of trading at TASE, refuted the researchers' claims, stating that there was nothing unusual in short positions in the stock exchange in the two months before the attack. Pagot also clarified that the short position in Leumi was taken by an unidentified Israeli bank known to TASE, and that the compliance measures in place would have prevented any involvement by a terror organization. TASE further criticized the researchers for not consulting with the exchange or its members before publishing their report.

In response, Jackson and Mitts acknowledged their error in calculating the profits on the positions at Leumi but maintained that their findings on short interest, the Israeli ETF, and short-dated options remained unchanged. They had identified 227,000 short transactions made on the Enterprise Investment Scheme (EIS), a security traded on the New York Stock Exchange, which yielded profits of $1-2 million. The researchers argued that such a volume of short-selling positions was significant and unlikely to have occurred by random chance.

The report has sparked a probe by Israeli authorities, who are investigating the suspicious stock trading activity leading up to the attack. Haaretz, citing anonymous Israeli sources, suggested the possibility that Hamas members were behind the shorts, noting that the ill-gotten gains could be frozen by US authorities due to American laws prohibiting the financing of terror. The professors also pointed out patterns in early April, when Hamas was initially planning the attack, showing a similar increase in short volume in the Israeli ETF.

The investigation is ongoing, with Israel's securities regulator in contact with the researchers but declining to comment until the TASE's rebuttal has been thoroughly investigated. The findings raise concerns about the potential use of financial markets for illicit activities by terrorist organizations.