In the Matter of Certain Transactions, File No. HO-9325
PRIVILEGED AND CONFIDENTIAL,
eee 040747
DESCRIPTION OF INVESTIGATION
Information gathered from domestic sources:
September 12. and
Continuing
September 18-20
Office of Market Surveillance (OMS) begen review of trading in
common stock and derivative securities in various sectors
Identified following sectors for more detailed review and analysis:
airlines and aerospace; insurance; financial services; banks;
defense; security providers; index products; and certain cruise
lines. Initial focus on large transactions in the options markets
related to identified companies. Review, however, includes
trading of even one contract with respect to certain securities.
Bluesheet requests made as well,
Requests for information made to following domestic
exchanges/SRO’s: Chicago Board Options Exchange; New York
Stock Exchange; American Stock Exchange; Philadelphia Stock
Exchange; Pacific Exchange; and NASDR.
Requests for identification of short positions made to: Depository
‘Trust Company and the National Securities Clearing Corp.
‘Subpoena later sent to SunGard Securities Finance Inc., formerly
Loanet, Inc., for similar information. (Formal Order issued
September 28.)
Request made to major brokerage firms that they survey trading
desks for any actual or proposed unusual activity. Request that
they extend inquiry to global desks and foreign affiliates,
Following firms contacted: PaineWebber; UBS Warburg; Morgan
Stanley Dean Witter; Goldman Sachs; Bear Steams; A.G.
Edwards; DLJ; Credit Suisse First Boston; Deutsche Bank Alex
Brown; Raymond James; SG Cowen; Merrill; J.P. Morgan;
Charles Schwab; Salomon; National Financial; Lehman;
Prudential; Jefferies; and Bank of America.
Request to Market Surveillance Unit of the New York Fed that
they review treasury markets for any unusual activity
Have received unsolicited information from variety of sources
(hedge funds, attomeys, other individuals), reporting suspected
unusual trading activityPRIVILEGED AND CONFIDENTIAL
Efforts to Locate Accounts of Suspected Terrorists
Week after
September 12
September 20-21
September 26
gation after Unusual Tra
Checked names of identified hijackers through MeDonald’s
Information Service. Obtained account documents, including new
account documentation, account statements, and documents
reflecting any deposits or transfers
Account documents of suspected terrorists provided to FBUFRG.
Issued Press Release 2001-103 publicizing information contained
in the Executive Order and FBI list, Requested that securities
entities voluntarily search records and notily Commission of any
‘accounts or transactions with persons or organizations identified on
lists. Established electronic mailbox (E see ov) 10
receive information and identified mail stop for hard copy
responses.
saction/Account Identified
Typically, have obtained additional information, including account
opening documentation and account statements. Identified
entity/petson behind the transaction, Conducted interviews either
of person at firm handling transaction o person placing order. In
some instances, through access grant have provided information to
the FBI
Requests for Foreign Assistance
ptember 18
Requested that foreign regulators review trading in their markets.
Asked that they: 1) provide trading data for any suspicious
transactions involving U.S. registered stocks and derivatives based
on U.S. registered stocks; and 2) provide trading data for the stocks
and derivatives of all U.S, registered cogspanies in certain sectors
(airlines, hotels, brokerage finms, bank ffolding companies, and
insurance and re-insurance companies). Following foreign
regulators contacted:
9/11 LawEnforcementSensitiveSeptember 24
PRIVILEGED AND CONFIDENTIAL,
9/11 LawEnforcementSensitive
‘Same request made to Swiss Federal Banking Commission
9/11 LawEnforcementSensitiveOstober 9
Systems Used or Created to Track Inform
September
Meeting with Other
September 17
September 20
September 25
September 26
September 28
PRIVILEGED AND CONFIDENTIAL
In addition, list identifying particular list of securities
pplied to Swiss and foreign regulators contacted
previously
Response from Federal Banking Commission. (Check with
OIA before sharing information with other agencies.)
Complete list of US. registered stocks and derivatives traded in
Switzerland provided. Surveillance offices of Swiss exchanges
are analyzing market data for unusual trading. SFBC with then
determine customer identifications. Provided press
communication issued on October 2 by SFBC ordering
reporting on terrorist accounts.
cand
tion
Created intemal database to record and search names provided by
FBI ~ instituted system to update database on timely basis with
information from FB
Created computer system to log identified accounts/transactions
nquiry or analysis undertaken by SEC stall
ernment Official
/Ayencies and Access Grants
‘Mecting held at FBI headquarters with FBI and other criminal
authorities and regulators, Coordination to ensure all potentially
relevant information reported to contact at FBI headquarters,
Effort to ensure that central database has all relevant information,
including information provided to local USAO's or FBI offices
pursuant to access grants, For part of meeting, SEC met separately
th FBI representative and other regulators (CFTC and NASDR),
Described our review
Meeting with FBI agents 1 Law€nforcementPrivacy
William Macke
and
‘now representing the Financial Review Group.
Meeting with FBI, USAO of SDNY, and AUSA Ken Breen from
EDNY who is principal contact person for Financial Review
Group
Briefod repr
Council
jesentative (Joseph M. Myers) from National Security
Bricfed stat of Senate Banking Committee.PRIVILEGED AND CONFIDENTIAL
Numerous contacts both in person and'by telephone with AUSA.
Breen, principal contact person for Financial Review Group. In
addition, we have been in frequent contact with AUSA Khuzami,
detailed to the New York Command Center.
Meeting with Industry Groups and Others
October 4
Prophylactic §
Met with SIA members, DOJ representatives, FBI and Secret
Service agents. Topic: whether requests for information can be
more detailed and streamlined
Asked exchanges to notify Commission if detect any unusual
activity in a particular sectors, e.g., pharmaceuticals,