Questions Raised on Purchases of Tokyo Electric Power Shares

“There’s somebody out there that holds a whale of a position, and structured the position in such a way that they don’t have to file” a mandatory disclosure.

TEPCO's Twin Tower power station in Yokohama
Wikimedia Commons image

Keith Bradsher
New York Times

TOKYO — Japanese regulators and executives of the Tokyo Electric Power Company are asking questions about a seemingly coordinated series of stock purchases two weeks ago that led to an undisclosed buyer or buyers acquiring a large bloc of the utility, which owns Japan’s dangerously damaged nuclear power plant.

Regulators want to know whether the trades, valued at up to $600 million and placed from Hong Kong during the week of April 3, were structured to circumvent Japanese securities laws, which require the owner of more than 5 percent of a publicly traded company to file disclosure papers identifying the shareholder.

Depending on the prices at which the buy orders were executed, they could add up to nearly 10 percent of Tepco’s shares.

The trading and the questions surrounding it were described by a senior executive in an interview here. The executive insisted on anonymity to protect business and government connections.

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Goldman In Insider Trading Probe?

Matt Taibbi
Rolling Stone

News leaked out today that the feds will soon be herding a whole pen full of Wall Street firms into court on insider trading charges, including, reportedly, our old friends Goldman, Sachs.

The basic charge here is that investment banks and other firms were leaking insider info about things like mergers to closely-allied hedge funds, who in turn placed the requisite bets on or against the companies in question.


The most interesting detail in the WSJ piece, to me, was a bit about an email sent by one John Kinnucan, a principal at an Oregon-based company called Broadband Research, to a number of his clients. The email reads, in part, as follows:

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information… (They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

Aside from the amusing detail here in which Kinnucan brags about turning down an offer to cooperate with the feds (I ain't no stinking rat!) the thing to note here is the list of clients he sent this email to. Those include hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.

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RELATED ARTICLE:
The Stock Market Rug is Being Pulled Out By Insiders

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Baby Boomers: Get Out of the Stock Market Now, the Rug is Being Pulled Out By Insiders

CNBC reports insider selling-to-buying ratio for top firms is a staggering 3177 to 1

Eric Blair

Activist Post

If you're a baby boomer who still believes in the stock market since the financial collapse of 2008, listen up. The floor of this Ponzi scheme is about to drop out, leaving you punching a clock for some time to come and holding an empty retirement bag for your effort.  The engineered crash is coming and the elite are jumping ship in droves -- you should join them and get out ASAP.

Stock market insider selling has now reached record highs.  The trend has been increasing for the last several years, but now the ratios are getting beyond ridiculous.  Earlier this month, Zero Hedge reported that the insider selling-to-buying ratio is 2341 to 1.  Tyler Durden wrote:

After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone.

Today, CNBC reported that the insider selling activity at some of the largest traded companies is at an all-time high.  This can't be a good sign of things to come.  The article points to the analysis of Alan Newman, a market strategist who tracks insider trading: "The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst . . . ever."  CNBC reported that industry leaders have a staggering 3177 to 1 insider sell-to-buy ratio:

The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.

The grand total for the three sectors are “as awful as we have ever seen since we began doing this exercise years ago,” said Newman, who was ahead on such trends as the dangers of high-frequency trading and ETFs before the ‘Flash Crash’. “Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.”

Also quoted in the CNBC piece was Simon Baker, CEO of Baker Asset Management, who said the insider data “is good reason for considerable caution once the price action fades,” and “insiders normally buy early and sell early too. Longer term -- 12 months out -- it is more of a red flag.”

It's pretty difficult to excuse these levels of insider looting, but the experts are doing their best to claim that these poor executives (the titans of their industries) must take profits from stock sales because their salaries and bonuses have been cut.  Who do they think they are kidding?  Wall Street is still paying record salaries and bonuses, reportedly worth $144 billion (about a $1000 for every working American).  There also has been very little news of other industry executives taking pay cuts, as American companies are holding record levels of cash to the tune ofover a trillion dollars.  In fact, the flush-with-cash CEOs continue to blame the consumer class for joblessness.

Despite the mass exodus of executives from their own company's stock, the S&P continues to remain somewhat stable since gaining 16% from July lows.  Well, those gains seem somewhat pathetic since the value of the dollar -- measured against the human inflation indexes such as food and oil -- has plummeted.  Major food commodities are up over 50% since their July lows, while oil prices have climbed $10 to over $81/bbl, or around 14% for the same time period, with predictions to break the $100/bbl mark very shortly.  

Barely covering the cost of real inflationary measures is hardly success, especially with the current risks involved with being in the stock market.  These risks have only increased since the 2008 financial collapse that eventually caused the stock market to bottom out the mid-6000 range.  The market has been propped up with TARP funds and driven by scandalous front-running by Goldman Sachs and other large firms leading to 70% of stock purchases to be held for an average of 11 seconds. Consequently, these robo-trading programs have also been blamed for the freak "Flash Crash" in May where the stock market plummeted over 900 points in just minutes.

The charade is almost up, as the bad-but-getting-even-worse main street economy is not remotely factored in to Wall Street's casino calculations.  Truth is, most states are approaching bankruptcy, unemployment continues to worsen, and yet another major scandal is playing out with Fraudclosure Gate. Newman, the insider trading expert, says, “At the risk of sounding like a broken record, we expect a significant correction."

Unless you are an ultra-sophisticated trader with access to front-running software, it is time to follow these insiders out of the stock market and into real assets.  As the Fed announces plans for QE2, which the stock market actually views as a good thing, the elite seem to be flocking to precious metals, commodities, and large agricultural land purchases on the expectation of an even weaker dollar.  This appears to make gold, food, and oil pretty safe bets for the average bloke.

Recently by Eric Blair:
U.S. Debt Woes Expose Hidden Austerity and Looting of Public Assets
The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs

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70% of All Stock Market Trades Are Held for an Average of 11 SECONDS

Washington’s Blog

The Fourteenth Banker writes today:

In the stock market, program trading dominates volume. I heard recently that 70% of trade positions are held for an average of 11 seconds.

He’s correct.

As the New York Times dealbook noted in May:

These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said

Similarly, FT’s Martin Wheatley pointed out last month:

I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds.

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Soros insider trading case to be reviewed

Jane Croft
Financial Times
September 16, 2020

George Soros, the international investor and one of the world’s richest men, is to have his 2002 criminal conviction for insider trading reviewed by the European Court of Human Rights.

Mr Soros appealed to Strasbourg after he was convicted by a French court of insider trading in 2002 in relation to his conduct during a takeover battle in 1988 involving one of the country’s biggest banks, Société Générale.

The affair, involving an abortive stock market raid by Georges Pébereau, the French financier, to buy control of SG, implicated several businessmen and caused turmoil in French politics at the time.

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Unusual Volume of Call Contracts Traded, Suspicion Rises

Shepard Ambellas and Alex Thomas

The Intel Hub

The abnormally high volume of call contracts that were traded in the last few days is highly suspicious and should be investigated. Before 9/11 we saw the sell off of American Airlines stock and in the weeks leading up to the BP oil spill we saw the same with Goldman Sachs. While this could simply signify a buyout of Qwest by another entity, we can not rule out the possibility that this is a positioning play for a future false flag cyber attack, used to shut down the internet and move to what is known as the internet 2 system.

The ruling elite have eagerly awaited the launch of the internet 2 system. They want nothing more then to implement the total systematic dismantlement of the internet to stop the flow of real information to the people of the world.

Further research of the internet 2 reveals that Qwest has a big hand in this new system, a system that is intended to be a total and completely controlled, limited, and monitored form of the internet, allowing only massive corporate websites to operate on a subscription type basis. The internet 2 will be a glorified cable TV service, essentially letting you surf only what the government allows you to.

• Quest- Google Finance
• Internet2 Industry Membership

Alternative news sites will be a thing of the past as the uncontrolled media, due to the lock down of the internet, no longer has the ability to survive.

At the very least we need this information to go viral, the more people who are aware of these deals the better. We might be able to stop or derail a future event by spreading this information to all our personal contacts. The use of social networks such as Twitter, Youtube, and Facebook can be an extremely effective tool.

Montagraph has already done some impressive ground work on the situation. Please check out the interview Monty did with investigative reporter DallasGoldBug:

Market Intellisearch

Unusual volume of call contracts was traded today. There were 576,683 call contracts traded compared to the ten day average volume of 58,125 contracts. On the put side, 41 put contracts exchanged hands. Today’s traded Put/Call ratio is 0.00. There were 14065.44 calls traded for each put contract.

The following alerts were raised:
- Unusual Call Volume
- Low Put/Call Ratio
- 3 Month Record High Call Volume

The ratio skew implies that investors are hedging their positions in anticipation of a stock move. Today’s unusual volume activity confirms that traders are rebalancing their portfolios.

Shares of Qwest Communications International closed at $5.83 in the previous trading session and opened today at $5.82. Q is currently trading at $5.82, down $0.01 (-0.17%) in today’s trading session. The shares of the stock are trading between $5.79 and $5.86. Today’s volume of 20,740,102 shares is less than the average volume of 28,253,200 shares. The technical momentum Relative Strengh Index indicator shows overbought conditions. Q is trading above the 50 day moving average and higher than the 200 day moving average. The stock’s 52 week low is $3.30 and 52 week high is $5.85.

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Insider Trading: Pre-9/11 Put Options on Companies Hurt by Attack Indicates Foreknowledge

Financial transactions in the days before the attack suggest that certain individuals used foreknowledge of the attack to reap huge profits. ¹   The evidence of insider trading includes:

• Huge surges in purchases of put options on stocks of the two airlines used in the attack -- United Airlines and American Airlines
• Surges in purchases of put options on stocks of reinsurance companies expected to pay out billions to cover losses from the attack -- Munich Re and the AXA Group
• Surges in purchases of put options on stocks of financial services companies hurt by the attack -- Merrill Lynch & Co., and Morgan Stanley and Bank of America
• Huge surge in purchases of call options of stock of a weapons manufacturer expected to gain from the attack -- Raytheon
• Huge surges in purchases of 5-Year US Treasury Notes

In each case, the anomalous purchases translated into large profits as soon as the stock market opened a week after the attack: put options were used on stocks that would be hurt by the attack, and call options were used on stocks that would benefit.

Put and call options are contracts that allow their holders to sell and buy assets, respectively, at specified prices by a certain date. Put options allow their holders to profit from declines in stock values because they allow stocks to be bought at market price and sold for the higher option price. The ratio of the volume of put option contracts to call option contracts is called the put/call ratio. The ratio is usually less than one, with a value of around 0.8 considered normal. ²  

Losers

American Airlines and United Airlines, and several insurance companies and banks posted huge loses in stock values when the markets opened on September 17. Put options -- financial instruments which allow investors to profit from the decline in value of stocks -- were purchased on the stocks of these companies in great volume in the week before the attack.

United Airlines and American Airlines

Two of the corporations most damaged by the attack were American Airlines (AMR), the operator of Flight 11 and Flight 77, and United Airlines (UAL), the operator of Flight 175 and Flight 93. According to CBS News, in the week before the attack, the put/call ratio for American Airlines was four. ³   The put/call ratio for United Airlines was 25 times above normal on September 6. ⁴  

This graph shows a dramatic spike in pre-attack purchases of put options on the airlines used in the attack. (source: www.optionsclearing.com)

The spikes in put options occurred on days that were uneventful for the airlines and their stock prices.

On Sept. 6-7, when there was no significant news or stock price movement involving United, the Chicago exchange handled 4,744 put options for UAL stock, compared with just 396 call options -- essentially bets that the price will rise. On Sept. 10, an uneventful day for American, the volume was 748 calls and 4,516 puts, based on a check of option trading records. ⁵  

The Bloomberg News reported that put options on the airlines surged to the phenomenal high of 285 times their average.

Over three days before terrorists flattened the World Trade Center and damaged the Pentagon, there was more than 25 times the previous daily average trading in a Morgan Stanley "put" option that makes money when shares fall below $45. Trading in similar AMR and UAL put options, which make money when their stocks fall below $30 apiece, surged to as much as 285 times the average trading up to that time. ⁶  

When the market reopened after the attack, United Airlines stock fell 42 percent from $30.82 to $17.50 per share, and American Airlines stock fell 39 percent, from $29.70 to $18.00 per share. ⁷  

Reinsurance Companies

Several companies in the reinsurance business were expected to suffer huge losses from the attack: Munich Re of Germany and Swiss Re of Switzerland -- the world's two biggest reinsurers, and the AXA Group of France. In September, 2001, the San Francisco Chronicle estimated liabilities of $1.5 billion for Munich Re and $0.55 bilion for the AXA Group and telegraph.co.uk estimated liabilities of £1.2 billion for Munich Re and £0.83 billion for Swiss Re. 8   ⁹  

Trading in shares of Munich Re was almost double its normal level on September 6, and 7, and trading in shares of Swiss Re was more than double its normal level on September 7. ¹⁰  

Financial Services Companies

Merrill Lynch and Morgan Stanley Morgan Stanley Dean Witter & Co. and Merrill Lynch & Co. were both headquartered in lower Manhattan at the time of the attack. Morgan Stanley occupied 22 floors of the North Tower and Merrill Lynch had headquarters near the Twin Towers. Morgan Stanley, which saw an average of 27 put options on its stock bought per day before September 6, saw 2,157 put options bought in the three trading days before the attack. Merrill Lynch, which saw an average of 252 put options on its stock bought per day before September 5, saw 12,215 put options bought in the four trading days before the attack. Morgan Stanley's stock dropped 13% and Merrill Lynch's stock dropped 11.5% when the market reopened. ¹¹  

Bank of America showed a fivefold increase in put option trading on the Thursday and Friday before the attack.

A Bank of America option that would profit if the No. 3 U.S. bank's stock fell below $60 a share had more than 5,900 contracts traded on the Thursday and Friday before the Sept. 11 assaults, almost five times the previous average trading, according to Bloomberg data. The bank's shares fell 11.5 percent to $51 in the first week after trading resumed on Sept. 17. ¹²  

Winners

While most companies would see their stock valuations decline in the wake of the attack, those in the business of supplying the military would see dramatic increases, reflecting the new business they were poised to receive.

Raytheon

Raytheon, maker of Patriot and Tomahawk missiles, saw its stock soar immediately after the attack. Purchases of call options on Raytheon stock increased sixfold on the day before the attack.

A Raytheon option that makes money if shares are more than $25 each had 232 options contracts traded on the day before the attacks, almost six times the total number of trades that had occurred before that day. A contract represents options on 100 shares. Raytheon shares soared almost 37 percent to $34.04 during the first week of post-attack U.S. trading. 13  

Raytheon has been fined millions of dollars inflating the costs of equipment it sells the US military. Raytheon has a secretive subsidiary, E-Systems, whose clients have included the CIA and NSA. ¹⁴  

US Treasury Notes

Five-year US Treasury notes were purchased in abnormally high volumes before the attack, and their buyers were rewarded with sharp increases in their value following the attack.

The Wall Street Journal reported on October 2 that the ongoing investigation by the SEC into suspicious stock trades had been joined by a Secret Service probe into an unusually high volume of five-year US Treasury note purchases prior to the attacks. The Treasury note transactions included a single $5 billion trade. As the Journal explained: "Five-year Treasury notes are among the best investments in the event of a world crisis, especially one that hits the US. The notes are prized for their safety and their backing by the US government, and usually rally when investors flee riskier investments, such as stocks." The value of these notes, the Journal pointed out, has risen sharply since the events of September 11. 15  

The SEC's Investigation

Shortly after the attack the SEC circulated a list of stocks to securities firms around the world seeking information. ¹⁶   A widely circulated article states that the stocks flagged by the SEC included those of the following corporations: American Airlines, United Airlines, Continental Airlines, Northwest Airlines, Southwest Airlines, US Airways airlines, Martin, Boeing, Lockheed Martin Corp., AIG, American Express Corp, American International Group, AMR Corporation, AXA SA, Bank of America Corp, Bank of New York Corp, Bank One Corp, Cigna Group, CNA Financial, Carnival Corp, Chubb Group, John Hancock Financial Services, Hercules Inc., L-3 Communications Holdings, Inc., LTV Corporation, Marsh & McLennan Cos. Inc., MetLife, Progressive Corp., General Motors, Raytheon, W.R. Grace, Royal Caribbean Cruises, Ltd., Lone Star Technologies, American Express, the Citigroup Inc., Royal & Sun Alliance, Lehman Brothers Holdings, Inc., Vornado Reality Trust, Morgan Stanley, Dean Witter & Co., XL Capital Ltd., and Bear Stearns.

An October 19 article in the San Francisco Chronicle reported that the SEC, after a period of silence, had undertaken the unprecedented action of deputizing hundreds of private officials in its investigation:

The proposed system, which would go into effect immediately, effectively deputizes hundreds, if not thousands, of key players in the private sector.
...
In a two-page statement issued to "all securities-related entities" nationwide, the SEC asked companies to designate senior personnel who appreciate "the sensitive nature" of the case and can be relied upon to "exercise appropriate discretion" as "point" people linking government investigators and the industry. ¹⁷  

Michael Ruppert, a former LAPD officer, explains the consequences of this action:

What happens when you deputize someone in a national security or criminal investigation is that you make it illegal for them to disclose publicly what they know. Smart move. In effect, they become government agents and are controlled by government regulations rather than their own conscience. In fact, they can be thrown in jail without a hearing if they talk publicly. I have seen this implied threat time and again with federal investigations, intelligence agents, and even members of the United States Congress who are bound so tightly by secrecy oaths and agreements that they are not even able to disclose criminal activities inside the government for fear of incarceration. ¹⁸  

Interpreting and Reinterpreting the Data

An analysis of the press reports on the subject of apparent insider trading related to the attack shows a trend, with early reports highlighting the anomalies, and later reports excusing them. In his book Crossing the Rubicon Michael C. Ruppert illustrates this point by first excerpting a number of reports published shortly after the attack:

• A jump in UAL (United Airlines) put options 90 times (not 90 percent) above normal between September 6 and September 10, and 285 times higher than average on the Thursday before the attack.
  -- CBS News, September 26
• A jump in American Airlines put options 60 times (not 60 percent) above normal on the day before the attacks.
  -- CBS News, September 26
• No similar trading occurred on any other airlines
  -- Bloomberg Business Report, the Institute for Counterterrorism (ICT), Herzliyya, Israel [citing data from the CBOE] ³
• Morgan Stanley saw, between September 7 and September 10, an increase of 27 times (not 27 percent) in the purchase of put options on its shares. ⁴ 
• Merrill-Lynch saw a jump of more than 12 times the normal level of put options in the four trading days before the attacks. ⁵

---

[Excerpted ENDNOTES]

3. "Mechanics of Possible Bin Laden Insider Trading Scam," Herzlyya International Policy Institute for Counter Terrorism (ICT), September 22, 2001. Michael C. Ruppert, "The Case for Bush Administration Advance Knowledge of 9-11 Attacks," From the Wilderness April 22, 2002. Posted at Centre for Research and Globalization .

4. ICT, op. cit, citing data from the Chicago Board of Options Exchange (CBOE). [...] "Terrorists trained at CBPE." Chicago Sun-Times, September 20, 2001, . "Probe of options trading link to attacks confirmed," [...] Chicago Sun-Times, September 21, 2001, .

5. ICT, op. cit.

¹⁹  

Ruppert then illustrates an apparent attempt to bury the story by explaining it away as nothing unusual. A September 30 New York Times article claims that "benign explanations are turning up" in the SEC's investigation. ²⁰   The article blames the activity in put options, which it doesn't quantify, on "market pessimism," but fails to explain why the price of the stocks in the airlines doesn't reflect the same market pessimism.

The fact that $2.5 million of the put options remained unclaimed is not explained at all by market pessimism, and is evidence that the put option purchasers were part of a criminal conspiracy. ²¹  

---

References

1. Insider Trading Apparently Based on Foreknowledge of the 9/11 Attacks, London Times, 9/18/01 [cached]
2. Put/Call Ratio, StreetAuthority.com, 
3. Profiting From Disaster?, CBSNews.com, 9/19/01 [cached]
4. Prices, Probabilities and Predictions, OR/MS Today, [cached]
5. Exchange examines odd jump, Associated Press, 9/18/01 [cached]
6. SEC asks Goldman, Lehman for data, Bloomberg News, 9/20/01 [cached]
7. Black Tuesday: The World's Largest Insider Trading Scam?, ict.org.il, September 19, 2001 [cached]
8. Suspicious profits sit uncollected Airline investors seem to be lying low, San Francisco Chronicle, 9/29/01 [cached]
9. Profits of doom, telegraph.co.uk, 9/23/01 [cached]
10. Profits of doom ..., 9/23/01
11. Black Tuesday ..., 9/19/01
12. Bank of America among 38 stocks in SEC's attack probe, Bloomberg News, 10/3/01 [cached]
13. Bank of America ..., 10/3/01
14. Raytheon, corpwatch.org, 
15. Suspicious trading points to advance knowledge by big investors of September 11 attacks, wsws.org, 10/5/01 [cached]
16. Bank of America ..., 10/3/01
17. SEC wants data-sharing system Network of brokerages would help trace trades by terrorists, San Francisco Chronicle, 9/19/01 [cached]
18. Crossing the Rubicon, , page 243
19. Crossing the Rubicon, , page 238-239,634
20. Whether advance knowledge of U.S. attacks was used for profit, New York Times, 9/30/01 [cached]
21. Suspicious profits ..., 9/29/01 


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