Unusual Trading Before 9/11: What the Studies Found—and What Investigators Did Not Publicly Resolve

Peer-reviewed studies identified statistically unusual trading before September 11, including patterns some researchers interpreted as consistent with informed trading. Federal investigators reported finding no securities trades based on advance knowledge of the attacks. The detailed public record, however, does not show how every anomaly identified by subsequent research was resolved.

Introduction

In the days right before September 11, there was a noticeable surge in put-option trading for stocks that were expected to decline sharply after the attacks. Although the most reported cases involved United Airlines and American Airlines, later studies looked at broader markets and a wider array of options data.

Often, two distinct questions get mixed up:

1. Was the trading statistically unusual?
2. Can any particular trade be attributed to someone possessing advance knowledge of the attacks?

Several studies support the conclusion that portions of the trading were statistically unusual. The inference that some activity reflected advance knowledge is stronger than ordinary market noise alone, but the studies do not identify the traders or establish the source of their information. The SEC, FBI and 9/11 Commission reported that their investigations found no securities trades based on advance knowledge of the attacks.

It’s important to note that these conclusions are not necessarily contradictory. A statistical model can reveal trading patterns that seem unusual without identifying who is behind the trades or where they obtained their information. An investigation can attribute specific trades to individuals without always making the detailed transaction evidence publicly available for others to scrutinize.

Thus, the most responsible conclusion isn’t that “insider trading has been proven” or “all questionable trading has been dismissed.” The existing records highlight significant anomalies, a substantial official inquiry, and a disconnect between the investigation’s public findings and the detailed evidence needed for outside verification.

What the studies found

Evidence assessment: The studies document statistically abnormal trading patterns. Some authors interpreted those patterns as consistent with informed trading, but the statistical evidence does not identify the beneficial owners of the accounts, their communications or the source of their information. The inference of advance knowledge is therefore strong but incomplete.

Insights from Investigators

The SEC launched its investigation right after the attacks, on September 12, 2001. In a statement released on July 22, 2004, the agency noted that it scrutinized over 9.5 million securities transactions that occurred in the weeks leading up to the tragic events. Collaborating with major exchanges and self-regulatory organizations, they looked into securities and derivatives linked to 103 companies from six different industry sectors across seven markets.

The SEC emphasized:

“We did not develop any evidence suggesting that anyone who had advance knowledge of the September 11 attacks traded on the basis of that information.”

Similarly, the 9/11 Commission confirmed that thorough inquiries conducted by the SEC, FBI, and other agencies uncovered no proof that individuals with advance knowledge profited through their investments.

Evidence Assessment: It’s established that investigators published this finding. However, this conclusion doesn’t equate to a detailed analysis of each transaction that can be independently replicated.

The Commission’s United Airlines example

The Commission did point out a United Airlines trade that, at first glance, seemed quite suspicious: a U.S.-based institutional investor bought 95 percent of the UAL put volume on September 6.

Investigators reported that the same institution purchased 115,000 shares of American Airlines on September 10—the next trading day—and lost money when those shares declined after the attacks.

This serves as a significant official explanation for an apparent anomaly. It illustrates why raw put volume alone can’t serve as definitive evidence on its own.

However, it doesn’t resolve every query raised by subsequent studies. The phrase “no conceivable ties to al-Qaeda” addresses one possible origin of foreknowledge, but it doesn’t reveal the beneficial owner’s identity, the decision-makers involved, their communications, or any comprehensive strategy documentation related to all statistically identified transactions across various markets.

The public evidence gap

The official investigation was considerably more extensive than what early news reports sometimes imply. However, the way it has been communicated to the public is quite limited, focusing mainly on a single conclusion, selective examples, and brief summaries.

What the public record does not include:

• A complete rundown of all the transactions that were investigated.
• Information on the beneficial owners of every account that was looked at.
• The identities of those who directed institutional trades.
• A detailed account of the subpoenas, interviews, and communications that helped clarify each trade.
• Connections drawn between later academic findings and the trades reviewed by investigators.
• A detailed explanation for each candidate found in subsequent studies.
• The entire investigative record pertaining to foreign markets.

This lack of information doesn’t necessarily mean that investigators fell short in gathering the needed data. It does, however, indicate that the public cannot verify every claim related to these anomalies using the information provided.

Evidence grade: The lack of a detailed public transaction record is noted as a significant finding. Claims suggesting that undisclosed evidence indicates foreknowledge should be treated as hypotheses that require proper documentation.

The reported $5 billion Treasury-note lead

On October 2, 2001, The Wall Street Journal reported that Secret Service investigators had contacted bond traders concerning large purchases of five-year Treasury notes before the September 11 attacks. Sources familiar with the inquiry described one reported transaction as a single $5 billion trade.

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An FBI Financial Review Group chronology independently documents the inquiry—but not the reported transaction itself. Its September 21 entry records that CFTC official Elizabeth Hastings had spoken with a New York Secret Service agent who was investigating a “rumor” about a sizable five-year Treasury-note transaction between August 27 and September 4, 2001. The agent reportedly received the information from a bond trader who considered the transaction contrary to market indicators.

The same chronology also records the subsequent follow-up. On September 27, Hastings told the FBI that she had checked with the Federal Reserve concerning Treasury purchases or sales in the reported amounts and found “nothing significant.” She also contacted Goldman Sachs because a transaction that large would ordinarily be expected to produce an offsetting hedge. According to the chronology, no activity of the reported proportions was found on either side of such a trade.

The surviving record therefore establishes that the Secret Service investigated a reported large Treasury-note transaction. It does not establish that a $5 billion transaction occurred. The Wall Street Journal report and the FBI chronology document the lead; the chronology also records a substantive negative result from the available market checks.

In June 2024, a requester sought the corresponding Secret Service records through FOIA. The Secret Service responded that it had located no responsive records. That response documents the present records gap, but it does not override the negative investigative result recorded in the FBI chronology.

Evidence assessment: The investigative lead is documented. The reported $5 billion transaction was not substantiated in the surviving record examined here. No evidence links it to advance knowledge of the attacks.

Convar and the recovered World Trade Center hard drives

In December 2001, Reuters reported that a German data-recovery firm, Convar, was analyzing hard drives retrieved from the World Trade Center, having allegedly uncovered signs of unusually large financial transactions shortly before the attacks. The report said that Convar was working for unnamed American clients and that those clients were cooperating with the FBI. It did not identify the clients or establish precisely what recovered data, if any, were delivered to investigators.

A declassified memorandum from the Commission dated August 2003 shows that during an FBI briefing, agents were not fully informed about the recovery and questioned what had actually been retrieved. To date, the public record does not include a client list, a manifest of the drives, a chain of custody, a dataset of the recovered transactions, a forensic report, or an evidence disposition from the FBI.

This does not confirm any illegal trades. It simply raises valid questions regarding records continuity and the need for further investigation.

Evidence grade: The evidence is strong but incomplete. While the recovery efforts and the surrounding reports are documented, the actual data and the investigative trail are not available to the public.

What should remain distinct

Several distinct financial subjects are often combined into one “money trail.” They require separate evidence:

• Trading in equity and options before the attacks;
• Transactions in foreign markets;
• Convar’s data recovery from the WTC hard drives;
• Failures in Treasury settlements post-attack;
• Credit card and wire transfer activities;
• Alleged transactions involving bearer bonds or Treasury notes;
• Claims related to PROMIS and other surveillance software.

It’s important to note that significant Treasury settlement failures after September 11 are well-documented. Research from the Federal Reserve outlines issues such as destroyed records, inaccessible offices, communication failures, and shortages of securities. The actual value of failed settlements does not equate to stolen funds.

What the record supports

Unusual trading before September 11 is not merely a product of early news coverage. Several peer-reviewed studies subsequently identified statistically abnormal patterns in options markets. Some researchers interpreted portions of that activity as consistent with informed trading, but the studies did not identify the traders or establish the source of their information.

The SEC and FBI conducted extensive investigations and reported finding no securities trades based on advance knowledge of the attacks. The public record explains some prominent anomalies, including the United Airlines example, but it does not provide the account-level evidence necessary to independently reconstruct every investigated trade or compare every official determination with anomalies identified by subsequent research.

The responsible conclusion is therefore bounded: unusual trading is documented; informed trading remains a serious but incomplete inference; and attribution to particular people or advance knowledge of the attacks has not been established in the public record.

Primary sources and studies

• SEC, Statement Concerning Terrorist Attack Trading Investigation, July 22, 2004
• National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report, (2004), Identify Chapter 5, note 130.
• 9/11 Commission, Monograph on Terrorist Financing: Staff Report to the Commission, 2004
• 9/11 Commission Memorandum for the Record, “FBI Briefing on Trading,” August 18, 2003
• SEC Response to David Callahan’s Request for the Documentary Evidence Cited in Footnote 130, December 23, 2009
  The SEC reported that it found no responsive information and had been advised that potentially responsive Commission records might have been destroyed.
• Allen M. Poteshman, “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001,” The Journal of Business, 2006
• Wong, Thompson and Teh, “Was There Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?” Multinational Finance Journal, 2011
• Chesney, Crameri and Mancini, “Detecting Abnormal Trading Activities in Option Markets,” Journal of Empirical Finance, 2015 — full text

Five-year Treasury-note investigation

• Charles Gasparino and Gregory Zuckerman, “U.S. Broadens Inquiry To Include Treasurys,” The Wall Street Journal, October 2, 2001
• FBI Financial Review Group, U.S. and Foreign Financial Markets Team, “Timeline of Significant Developments,” August 14, 2003 — NARA RG 148, Box 1, Folder 3, Document 10; public scan.
• MuckRock, “Trading Records Review,” Secret Service FOIA request. Request submitted June 3, 2024
• U.S. Secret Service final no-records response. Secret Service final response dated June 10, 2024

Convar and market disruption

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