Who profited from bombing?

U.S., British, German, Japanese and Italian government agencies are reportedly investigating links between alleged terrorist mastermind Osama bin Laden and various stock trades in the United States and Europe around the time of the devastating attacks on the World Trade Center and the Pentagon, which sent foreign markets into a tailspin over worries about the U.S. economy.

The Sankei Shimbun newspaper in Japan first reported the story. It was later picked up by United Press International.

Among other things, under a practice known as short-selling, a person with prior information can score large profits when a stock sinks in value on certain news — such as corporate problems, or in this case, the broader news of an attack that has crippled the United States.

Did bin Laden tip off his billionaire family or other rich allies in his terrorist cause? Did bin Laden, who is worth about $300 million, use his foreknowledge of the attack to profit personally?

The U.S. Securities and Exchange Commission declined to “confirm or deny” any such investigations by U.S. financial authorities, but a spokesman added that the agency has received a variety of investor e-mail “suggesting that the SEC check records” on stock transactions around the time of the attacks to establish any possible linkage to profiteering by persons related to the terrorists.

Today, the London Daily Mail is reporting that the CIA has regulators in London to investigate suspicious sales of millions of shares before last Tuesday’s attacks in America in the belief that the paper trail will lead to the terrorists.

Britain’s City watchdog, the Financial Services Authority, has launched an inquiry into unusual share price movements in London before last week’s atrocities.

“It would be a particularly ghoulish kind of insider dealing,” one source told the Daily Mail. “But if we find anyone profiteering out of the tragedy it could be a good lead for the investigation into exactly who is responsible.”

Germany’s security watchdog also launched an inquiry into “suspect” share price movements in the run-up to the atrocities. But a spokesman for the German stock exchange said an investigation found no evidence that bin Laden or others profited from advance knowledge of the attacks

Reinsurer Swiss Re and the French insurance giant Axa also suffered price falls before the outrage.

In cases of widespread short selling, the brokers start to follow the trend so as to cover themselves and this can force the market down.

A similar investigation is under way in Japan, where it is believed to be focusing on dealings in futures contracts.

In the futures market, investors bet on the future price of shares or commodities and can make enormous gains if their gambles prove correct.

Bin Laden comes from a wealthy Saudi business family and is believed to have financial tentacles reaching across the globe.

He is reported to have used a Milan brokerage to invest in European stock markets.

The Swiss authorities are also looking closely at his links with their country’s notoriously secretive banking system.