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Thread: SEC Found No Sign 9/11 Conspirators Traded On Plot

  1. #1
    Join Date
    Jan 2005

    SEC Found No Sign 9/11 Conspirators Traded On Plot

    SEC Found No Sign 9/11 Conspirators Traded on Plot

    (Gold9472: Just for safe keeping.)

    Joseph Schuman

    (April 30) -- Nearly nine years, two recessions and thousands of conspiracy theories later, the U.S. government has made it official: Initial speculation after the 9/11 terrorist attacks that plotters made financial bets against airlines or other companies hurt by the events was unfounded.

    The Securities and Exchange Commission began its inquiry into the matter on Sept. 12, 2001, and went on to examine trading in the U.S. and foreign securities markets that took place between Aug. 20 of that year and Sept. 11. While the agency wrapped up its investigation in May 2002, and there were references to the SEC's conclusions in the report by the federal 9/11 Commission, the findings were kept secret.

    But the privately operated, nonpartisan National Security Archives fought for six years to make the SEC report public, an effort aided by the Obama administration's push to declassify documents across the spectrum of government affairs. And today, most of the SEC's "Pre-September 11, 2001 Trading Review" was made public.

    "We have not developed any evidence that suggests that those who had advance knowledge of the attacks traded on the basis of that information," the SEC said. "In every instance where we noticed unusual trading before the attack, we were able to determine, either through speaking directly with those responsible for the trading, or by reviewing trading records, that the trading was consistent with a legitimate trading strategy."

    The SEC said it looked at 9.5 million securities transactions involving 103 companies in six industry groups and trading in seven financial markets.

    The inquiry's early focus was on the shares of UAL Corp. and AMR Corp., parent companies of United Airlines and American Airlines, whose planes were guided by terrorists into the World Trade Center towers and the Pentagon, as well as one brought down in a Pennsylvania field after passengers attacked the hijackers aboard.

    But the probe quickly widened to financial firms with significant operations in the World Trade Center and insurance companies that faced billions of dollars in losses following the attacks. Securities tied to defense and aerospace companies, security firms and travel and leisure services were examined as well.

    Shares in AMR and UAL dropped 40 percent or more after financial markets reopened on Sept. 17, 2001. And the commission's investigators found that short selling -- a means of betting against the companies -- substantially increased for UAL on Sept. 6 and for AMR on Sept. 10 of that year.

    Yet interviews with the financial advisers and traders who initiated those transactions found they based their decisions on several bearish factors already affecting the airline industry, including widely distributed recommendations for short selling from a California newsletter called Options Hotline.
    No One Knows Everything. Only Together May We Find The Truth JG

  2. #2
    Join Date
    Jan 2005
    SEC accused of dumping records

    By David S. Hilzenrath, Published: August 17

    The SEC has violated federal law by destroying the records of thousands of enforcement cases in which it decided not to file charges against or conduct full-blown investigations of Wall Street firms and others initially suspected of wrongdoing, a former agency official has alleged.

    The purged records involve major firms such as Goldman Sachs, Citigroup, Bank of America, Morgan Stanley and hedge-fund manager SAC Capital, the former official claimed. At issue were suspicions of actions such as insider trading, financial fraud and market manipulation.

    The allegations come at a time when the Securities and Exchange Commission faces criticism that it has pulled punches or missed warning signs in its policing of Wall Street.

    A file closed in 2002 involved Lehman Brothers, the investment bank whose collapse fueled the financial meltdown of 2008, according to the former official. A file closed in 2009 involved suspected insider trading in securities related to American International Group, the insurance giant bailed out by the government at the height of the financial crisis, the former official wrote.

    Others involved Bernard Ma^doff, whose multibillion-dollar Ponzi scheme the agency failed to stop despite repeated tips.

    The allegations were leveled in a July letter to Sen. Charles E. Grassley (R-Iowa) from Gary J. Aguirre, a former SEC enforcement lawyer now representing a current SEC enforcement lawyer, Darcy Flynn.

    Flynn last year began managing SEC enforcement records and became concerned that records that were supposed to be preserved under federal law were being purged as a matter of SEC policy, Aguirre wrote.

    Flynn contacted the National Archives and Records Administration, which sent a letter to the SEC saying it appeared there had been "an unauthorized disposal of federal records," Aguirre wrote.

    Based on Flynn's account, the SEC inspector general's office has been investigating and plans to issue a report by the end of September, Inspector General H. David Kotz said.

    From 1993 through July 2010, records of about 9,000 preliminary inquiries were destroyed, Aguirre wrote. The inquiries, a first step in the enforcement process, can lead to full-fledged SEC investigations or be dropped without further action. They are known as MUIs, or "matters under inquiry," and are opened when the SEC has reason to suspect someone violated securities law.

    According to Aguirre, an internal directive to SEC enforcement officials said: "After you have closed [an] MUI that has not become an investigation, you should dispose of any documents obtained in connection with the MUI."

    SEC spokesman John Nester confirmed that that was the agency's policy, but he said it was changed last year. The agency now directs employees to retain or dispose of inquiry records in accordance with the agency's records management policy, Nester said. He said he did not have that policy.

    Aguirre said federal law required that documents typically generated in preliminary inquiries be kept for 25 years.

    Nester said the retention requirements "pertain to documents that meet the definition of a record, not every document that comes into an agency's possession in the course of its work."

    When agency officials were framing a response to the National Archives in August 2010, they tried to cover up the facts, Aguirre alleged. One official said, "We could say that we do not believe there has been disposal inconsistent with the schedule," Aguirre wrote, citing Flynn's notes of the conversation.

    Another official said the matter could lead to criminal liability, according to Aguirre's letter.

    The agency's answer to the National Archives last year was "utter fiction, a lie," Aguirre wrote.

    According to Aguirre, the SEC told the National Archives that the enforcement division was "not aware of any specific instances of the destruction of records from any other MUI (i.e., an MUI that was closed without a subsequent formal investigation), but we cannot say with certainty that no such documents have been destroyed over the past 17 years."

    Grassley, who released a copy of Aguirre's letter Wednesday, called on the SEC to explain what happened.

    Aguirre wrote that the issue has "far-reaching, troubling implications for the leadership of the agency which is supposed to protect the nation's investors and its financial markets."

    His allegations were first reported Wednesday by Rolling Stone.

    In contacting Congress on Flynn's behalf, Aguirre invoked whistleblower protection and said he was concerned that the agency "was in the process of engaging in a reprisal" against Flynn.

    Flynn is a 13-year veteran of the SEC's enforcement division, where he has received favorable evaluations and raises, Aguirre wrote.

    Aguirre is a former SEC whistle blower who accused the SEC of disregarding evidence of insider trading by a hedge fund and thwarting his investigation. He claimed that the SEC fired him when he pressed unsuccessfully to question a top Wall Street executive.

    The hedge fund later settled insider-trading charges with the SEC, and the SEC paid Aguirre $755,000 to settle his claim that he was fired in retaliation for blowing the whistle.
    No One Knows Everything. Only Together May We Find The Truth JG

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