Brokerages asked to search for suspicious trades on 38 firms


By RICHARD BLACKWELL

Tuesday, October 2, 2001  Page B1

Brokerages in Canada and the United States have been asked to investigate trading in the shares of 38 companies -- in industries ranging from airlines, to financial services and real estate -- to see if there were suspicious transactions ahead of the Sept. 11 terrorist attacks on New York and Washington.

The list, prepared by the U.S. Securities and Exchange Commission, was revealed for the first time yesterday after the Investment Dealers Association of Canada sent a notice to its members and posted it on its Web site.

The list includes companies known to have been directly affected by the attacks, such as AMR Corp., whose American Airlines planes were taken over by hijackers and crashed, and Morgan Stanley Dean Witter & Co., the brokerage that was the largest tenant in the World Trade Center.

But it also includes many lesser known firms such as L-3 Communications Holdings Inc., which makes cockpit voice recorders, and Vornado Realty Trust, which managed the World Trade Center buildings.

The IDA asked its members to review the list "with a view of determining any unusual trading patterns, particularly any 'negative' trading (e.g. buying put options, writing call options, establishing substantial short positions), during the period from August 27, 2001 through Sept. 11, 2001."

An SEC spokesman declined to discuss the list yesterday. He said the only official SEC comment on the investigation has been a statement from its director of enforcement, Stephen Cutler.

Mr. Cutler said the SEC is "vigorously pursuing all credible leads" and is "working closely with other federal law enforcement authorities, as well as the self-regulatory organizations and our foreign regulatory counterparts."

Regulators around the world have been looking at trading in a number of firms to see if there is a possibility that terrorist groups used advance knowledge of the attacks to make substantial amounts of money that could be used to fund further operations.

The Toronto Stock Exchange has been examining trading leading up to the Sept. 11 attacks, but it would not specify what companies are being checked.

In Europe the investigations have focused on insurance companies that took a hit as a result of the attacks.

The IDA's vice-president of enforcement, Alex Popovic, said yesterday that the list was provided to the association by the Ontario Securities Commission, which got it from the SEC.

Mr. Popovic said the SEC has asked investment firms to concentrate on the stocks on the list, but not to limit themselves to those companies.

"The IDA became involved because we thought this was a serious enough situation that we should be there; we should be aware of what our members are doing and [make sure] they are aware."

Many Canadian securities firms have already been looking for evidence of suspicious trading, Mr. Popovic said.

By sending out the notice "we're making sure we're covering any possible missed individuals in the membership."

While it is unlikely that terrorists did any trading through Canadian investment dealers, "I think that out of an abundance of caution we have to check, and ask the membership to review, if they haven't already, to ensure that this hasn't happened," he said.

The IDA has also distributed to members a list of people and organizations under investigation by U.S. authorities for possible connection with the attacks.

The SEC published the list on Sept. 26 and asked financial firms to look for any relationships or transactions involving the groups and individuals.

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