Regulators in a number of European countries are looking into what may be suspicious sales of insurance stocks ahead of last week's terror attacks in the U.S. One suspicion is that the markets were being manipulated by businesses linked to Osama bin Laden.
European regulators are suspicious. Why did shares in some of the continent's biggest insurance companies fall so sharply in the days and weeks just ahead of last week's terrorist attacks? Was there a connection? Did somebody with inside knowledge of the attack on the World Trade Center and the Pentagon manipulate the insurance stocks by selling them "short?"
Following the lead of the United States Securities and Exchange Commission, and the Japanese financial supervisory agency, regulators in Italy, Switzerland, Germany, France have begun looking into suspicious trades before last Tuesday's attacks.
In Zurich, the Swiss stock exchange reportedly found a number of block - or large - trades of up to 16,000 shares in Europe's second largest re-insurer, Swiss Re. Meanwhile in France, the Governor of the central bank, Jean Claude Trichet has also called for a probe. In France, it is the nation's largest insurer, AXA where the big trades have come under suspicion. And in Germany, it is Munich Reinsurance, the world's largest re-insurer, where investigators are taking a look.
Selling a stock "short" means an insider can sell shares he does not own, fixing the date and the price of the sale in advance. By the time the sale goes through he can buy whatever he needs to cover the deal at a much lower price, and thereby make a profit - sometimes quite substantial.
Tuesday's terrorist events in the U.S. will cost insurers billions of dollars. Re-insurers like Swiss Re or Munich Re provide the insurance for other insurance companies. So if one insurance company takes a big hit from an unexpected disaster, it passes on its claim to a re-insurer. Switzerland and Germany have a number of these specialist re-insurance companies. Many of them have already announced they expect claims from the attacks ranging from $400 million to more than $1 billion.
Was someone with a link to the person the U.S. considers a prime suspect in the attacks - Osama bin Laden - gambling on a sure bet?
So far there are only suspicions. The big trades in Swiss Re, for instance, could have been prompted by poor half-year results announced a few days earlier. And at Munich Re, which lost 13 percent in the four days before the attacks - and a further 14 percent on the day itself - the company reportedly says its own monitoring showed no unusual share movements.
But nothing is ruled out either. Spokeswoman Sabine Reimer, of Germany's Federal Securities Regulatory Authority, told VOA these are routine checks and there are no concrete grounds for suspicion at this stage.
But she also confirmed the checks are linked to the terrorist attacks in New York and Washington. And while the investigation is not confined to specific shares, insurance stocks will be among the first to come under the microscope.