Two New York law professors say they identified a ‘sharp and unusual’ spike in short transactions prior to the Oct. 7 attack.

The Israeli government is investigating claims by U.S. researchers that some stock traders may have had prior knowledge of the Oct. 7 Hamas attack on Israel and used that information to make millions of dollars by short-selling Israeli companies.

In a draft paper released on Dec. 4, law professors Robert Jackson Jr. of New York University and Joshua Mitts of Columbia University said they identified a “sharp and unusual” spike in trading in “risky short-dated options” on Israeli companies in the days leading up to the deadly Hamas invasion of Israel.

Short-sellers bet against companies whose shares they expect to fall in price. They pay a fee to borrow shares in those companies and then sell them for the current market price, hoping to make a profit by buying them back for less before the shares have to be returned.

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