Staff Report to the Commission

Binalshibh said that when he spoke by phone with Atta in early September 2001, Atta

said he wanted to return some leftover funds. At the time, Binalshibh was in Madrid

trying to get a flight to Dubai, and had visa and passport problems. He explained his visa

and passport issues to Atta and advised him to send the money to someone else. Atta then

called Hawsawi to give him the information needed to pick up the wire transfers, as did

the other hijackers who wired money to Hawsawi. Binalshibh and Atta also discussed the

return of funds.

On September 11, Hawsawi used a blank check that Banihammad had provided him

earlier and an ATM card to withdraw from Banihammad’s Standard Chartered Bank

account the approximately $7,880 in dirhams that Banihammad had wired there. He then

deposited about $16,348 in dirhams to his own checking account at Standard Chartered

Bank, reflecting the proceeds of the wire transfers he had received. Next, he transferred

$41,000 from his checking account to his Standard Chartered Bank Visa card and left

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Dubai for Karachi, Pakistan, leaving some funds in the account. On September 13, 2001,

KSM used a supplemental Visa card issued for Hawsawi’s Standard Chartered Bank

account to make six cash withdrawals at ATMs in Karachi totaling about $900.161 The

remaining funds, roughly $40,000, were not withdrawn or transferred before the UAE

froze the account after September 11. KSM has since acknowledged withdrawing funds

returned by Atta to Hawsawi; he claimed he gave the money to a senior al Qaeda leader,

Abu Hafs, in Kandahar. It is not clear if KSM was referring to the approximately $900 he

withdrew from the account, or if Hawsawi had provided KSM with additional funds in

cash after 9/11.

The hijackers’ efforts during their final days to consolidate and return funds to al Qaeda

reflect their recognition of the importance of money to the organization. Although some

of the hijackers did squander relatively small amounts on superfluous purchases,

including pornography, they generally consumed little, and plot leader Atta was

especially frugal. Indeed, Binalshibh has explained that frugality was important to Atta

because he did not want to waste funds he considered to be blessed and honored.

Funding of Other Plot Participants

In addition to the 19 hijackers, other plot participants received al Qaeda funding for their

role in the plot. KSM said that he, Binalshibh, and Hawsawi each received $10,000 (in

addition to the funds they provided the hijackers). The details of this funding are not

entirely clear, but KSM said he personally used $6,000 of his money to rent a safehouse

in Karachi. Ali required no support from al Qaeda, as he already lived and worked in the

UAE. By contrast, al Qaeda had to pay for Hawsawi, the other UAE-based plot

facilitator, because he traveled and was living there solely to support 9/11 and other al

Qaeda operations. Hawsawi incurred substantial expenses on behalf of the plot, covering

travel, apartment rental, car rental, and living expenses.

The available evidence does not make clear how Hawsawi received funds for his plotrelated

activities. He claimed he received $30,000 in cash from Hamza al Qatari—then an

al Qaeda financial manager—that Hawsawi brought into the UAE with him. Hawsawi

claimed he received no other funds except for approximately $3,000–$4,500 that

Banihammad brought to him, which he assumes came from KSM or Qatari. Although

Hawsawi claimed that these funds were sufficient for all his activities in the UAE, their

total was clearly less than Hawsawi’s known expenses in the UAE. These included aiding

the 9/11 hijackers, financing his own living expenses, buying supplies for al Qaeda,

wiring Binalshibh a total of $16,500, wiring funds to another likely al Qaeda operative in

Saudi Arabia, and providing $13,000 to yet another al Qaeda operative who transited the

UAE before departing for another operation on September 10, 2001. Moreover, KSM

gave a different account of how Hawsawi was funded. In KSM’s version, Hawsawi had a

budget of $100,000 and KSM provided all the funds, either by courier or by the muscle

hijackers as they traversed the UAE after picking up the money from KSM in Pakistan.

161 The supplemental Visa card had been applied for on August 25, 2001 in the name of an alias used by

KSM.

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While in the UAE, Hawsawi received two wire transfers totaling about $6,500 from a

Sudanese national then living in Saudi Arabia. Both the transfers were sent in August

2001 from the National Commercial Bank in Saudi Arabia to Hawsawi’s Standard

Chartered Bank account in the UAE. According to information provided by a foreign

security agency, the sender claims he was asked to wire the funds by Uthman al Shehri,

the brother of hijackers Waleed and Wail al Shehri. The purpose of the transaction

remains unknown, and the relevant witnesses are currently beyond the reach of the U.S.

government.

Binalshibh said that he met KSM in Karachi in June 2001; there KSM gave him a plane

ticket to Malaysia, where he planned to meet with Atta.162 Binalshibh said he also

received $5,000 from Abu Hafs to support his travel in June. He may have received

additional funds during this trip. According to Binalshibh, he was living on al Qaeda

money when he returned to Germany in June 2001. On September 3, 2001, Hawsawi,

using an alias, wired $1,500 from the UAE to Binalshibh, also using an alias, in

Hamburg, presumably to pay for his subsequent travel from Germany, which took place

on September 5.

Binalshibh also funded his activities in part by controlling Marwan al Shehhi’s bank

account, which he apparently accessed with an ATM card, and with the assistance of

Motassadeq, who held power of attorney over the account. Binalshibh himself said that

Shehhi left him “a credit card” when Shehhi departed Hamburg for the United States in

mid-2000. For example, Binalshibh withdrew money from Shehhi’s account to send

$2,200 to the Florida Flight Training Center in August 2000 in apparent anticipation of

his own arrival in the United States. Activity in Shehhi’s German bank account indicates

that Binalshibh was accessing his funds while he was in the United States.

In January 2001 Atta, sent a $1,500 wire transfer via Western Union from Florida to

Binalshibh in Hamburg. There is no known explanation for this transaction, which seems

especially odd because Binalshibh had access to Shehhi’s German account at the time.

Total Cost

We estimate that the total cost of the 9/11 attacks was somewhere between $400,000 and

$500,000. The hijackers spent more than $270,000 in the United States, and the costs

associated with Moussaoui were at least $50,000. The additional expenses included travel

to obtain passports and visas, travel to the United States, expenses incurred by the plot

leader and facilitators, and the expenses incurred by would-be hijackers who ultimately

did not participate. For many of these expenses, we have only a mixture of fragmentary

evidence and unconfirmed reports, and can make only a rough estimate of costs. Adding

up all the known and assumed costs leads to a rough range of $400,000 to $500,000. This

estimate does not include the cost of running training camps in Afghanistan where the

162 The meeting in Malaysia ultimately did not take place because Atta was busy awaiting the arrival of the

additional hijackers in the U.S.; the meeting took place later in Spain.

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hijackers were recruited and trained or the marginal cost of the training itself. For what its

worth, the architect of the plot, KSM, put the total cost at approximately $400,000,

including the money provided to the hijackers and other facilitators, although apparently

excluding Moussaoui. Although we cannot know if this estimate is accurate, it seems to

be reasonable, given the information available.

Ultimately, knowing the exact total cost of the plot makes little difference. However

calculated, the expense—although substantial—constituted a small fraction of al Qaeda’s

budget at the time. As we discuss in chapter 2, al Qaeda’s annual budget for the relevant

period has been estimated to be about $30 million. Even today, with its estimated

revenues significantly reduced, al Qaeda could still likely come up with the funds to

finance a similar attack.

Origin of the Funds

To date, the U.S. government has not been able to determine the origin of the money used

for the 9/11 attacks. As we have discussed above, the compelling evidence appears to

trace the bulk of the funds directly back to KSM and, possibly, Qatari, but no further.163

Available information on this subject has thus far has not been illuminating.164 According

to KSM, Bin Ladin provided 85–95 percent of the funds for the plot from his personal

wealth, with the remainder coming from general al Qaeda funds. To the extent KSM

intended to refer to wealth Bin Ladin inherited from his family or derived from any

business activity, this claim is almost certainly wrong, because Bin Ladin was not

personally financing al Qaeda during this time frame.165 Ultimately the question of the

origin of the funds is of little practical significance. Al Qaeda had many avenues of

funding. If a particular source of funds dried up, it could have easily tapped a different

source or diverted money from a different project to fund an attack that cost $400,000–

$500,000 over nearly two years.

We know that a small percentage of the plot funds originated in the bank account of

Shehhi, which apparently came from his military salary. Binalshibh drew on these funds

to wire approximately $10,000 to Shehhi in the United States, as well as to support his

own role in the plot to some degree. Al Qaeda does not necessarily have to completely

fund terrorist operatives. Some, like Shehhi, have means and can fund themselves, at

least in part, a factor that makes the fight on “terrorist financing” all the more difficult.

163 FBI Assistant Director Pistole testified that the FBI had traced the funds back to certain bank accounts in

Pakistan, see Senate Govt. Affairs Committee, July 31, 2003, but the FBI has clarified that Pistole meant

the funds were traced back to KSM in Pakistan. No actual bank accounts there have been identified.

164 Senior al Qaeda detainee Abu Zubaydeh has commented on the source of the funding; he said that KSM

received funds for the 9/11 operation directly from UBL, bypassing al Qaeda Finance Chief, Shayk Said,

and suggested that some of the funds came from money that Zubaydeh had provided UBL for use in an

operation against Israel. Zubaydeh, however, apparently did not participate in the 9/11 planning, and his

statements lack any foundation.

165 Instead, al Qaeda relied on donations provided by witting donors and diverted from legitimate charitable

donations by al Qaeda supporters. See chapter 2 (discussing al Qaeda financing). It is also possible KSM

meant that Bin Ladin funded the plot with funds he kept under his personal control.

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Appendix B: Securities Trading

This appendix describes the staff and U.S. government investigations into the issue of

whether anyone with foreknowledge of the 9/11 attacks profited through securities

trading, and explains the conclusion in the Commission’s final report that extensive

government investigation has revealed no evidence of such illicit trading.

Almost since 9/11 itself, there have been consistent reports that massive “insider trading”

preceded the attacks, enabling persons apparently affiliated with al Qaeda to reap huge

profits. The Commission has found no evidence to support these reports. To the contrary,

exhaustive investigation by federal law enforcement, in conjunction with the securities

industry, has found no evidence that anyone with advance knowledge of the terrorist

attacks profited through securities transactions.

Commission Staff Investigation

Commission staff had unrestricted access to the U.S. government officials who led and

conducted the investigation into securities trading in advance of 9/11. In addition to

interviewing the key personnel, Commission staff reviewed the nonpublic government

reports summarizing the investigative results as well as backup data, including

spreadsheets, memoranda and other analyses, and reports of interviews with traders,

securities industry participants, and other witnesses. We obtained and reviewed the

reports of investigations done by certain major nongovernmental securities industries

bodies who share responsibility with the government for monitoring securities trading in

U.S. markets, including the New York Stock Exchange and the National Association of

Securities Dealers Regulation, and interviewed witnesses from a key private-sector entity.

Commission staff also reviewed information provided by foreign securities regulators,

interviewed German law enforcement officials, and interviewed U.S. law enforcement

personnel regarding their contacts with their foreign counterparts on securities trading.

In addition, Commission staff drew on its review of extensive classified intelligence

concerning al Qaeda and how it manages its operations and its finances, as well as

debriefings of al Qaeda detainees, including 9/11 plot leader Khalid Sheikh Mohammed

and other plot participants. This information proved useful in evaluating how closely held

al Qaeda kept the 9/11 operation and the likelihood it would seek to profit from the

attacks through securities trading.

The U.S. Government Investigation of Trading in the United

States

The Securities and Exchange Commission (SEC) and the FBI, with the involvement of

the Department of Justice, conducted the investigation of the allegation that there was

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illicit trading in advance of 9/11; numerous other agencies played a supporting role.166

The SEC’s chief of the Office of Market Surveillance initiated an investigation into pre-

9/11 trading on September 12, 2001. At a multi-agency meeting on September 17, at FBI

headquarters, the SEC agreed to lead the insider trading investigation, keeping the FBI

involved as necessary. The Department of Justice assigned a white-collar crime

prosecutor from the U.S. Attorney’s Office in Brooklyn to work full-time on the

investigation; he relocated to Washington, D.C., on September 18.

The SEC undertook a massive investigation, which at various times involved more than

40 staff members from the SEC’s Division of Enforcement and Office of International

Affairs. The SEC also took the lead on coordinating intensive investigations by the selfregulatory

organizations (SROs) that share responsibility for monitoring the U.S.

securities markets, including, among others, the New York Stock Exchange, the

American Stock Exchange, the National Association of Securities Dealers Regulation,

and the Chicago Board Options Exchange. The investigation focused on securities of

companies or industries that could have been expected to suffer economically from the

terrorist attacks. Thus, the investigators analyzed trading in the following sectors:

airlines, insurance, financial services, defense and aerospace, security services, and travel

and leisure services, as well as companies with substantial operations in the area of the

World Trade Center. The investigation also included broad-based funds that could have

been affected by a major shock to the U.S. economy. Ultimately, the investigators

analyzed trading in 103 individual companies and 32 index or exchange-traded funds and

examined more than 9.5 million securities transactions.

The investigators reviewed any trading activity that resulted in substantial profit from the

terrorist attacks. Investments that profited from dropping stock prices drew great scrutiny,

including short selling167 and the purchase of put options.168 The SEC has long

experience in investigating insider trading violations, which can involve the use of these

techniques by those who know of an impending event that will make stock prices fall.

The investigators also sought to determine who profited from well-timed investments in

industries that benefited from the terrorist attacks, such as the stock of defense and

security companies, and who timely liquidated substantial holdings in companies likely to

suffer from the attacks.

166 The SEC is an independent federal agency entrusted with enforcing the federal securities laws. Its

Division of Enforcement has extensive experience in investigating insider trading. Because the SEC lacks

authority to bring criminal cases, it regularly works jointly with the FBI and DOJ, as it did in this case, on

potentially criminal securities law violations.

167 Short selling is a strategy that profits from a decline in stock price. A short seller borrows stock from a

broker dealer and sells it on the open market. At some point in the future, he closes the transaction by

buying back the stock and returning it to the lending broker dealer.

168 A put option is an investment that profits when the underlying stock price falls. A put option contract

gives its owner the right to sell the underlying stock at a specified strike price for a certain period of time.

If the actual price drops below the strike price, the owner of the put profits because he can buy stock

cheaper than the price for which he can sell it. By contrast, a call option contract is an investment that

profits when the underlying stock price rises. A call option contract gives its owner the right to buy the

underlying stock at a specified strike price for a certain time period. People illicitly trading on inside

information often have used options because they allow the trader to leverage an initial investment, so that

a relatively small investment can generate huge profits.

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The SEC investigators reviewed voluminous trading records to identify accounts that

made trades that led to profits as a result of the attacks. The SEC followed up on any such

trades by obtaining documents and, where appropriate, interviewing the traders to

understand the rationale for the trades. The SEC also referred to the FBI any trade that

resulted in substantial profit from the attacks—a much lower threshold for a criminal

referral than it would normally employ. Consequently, the FBI conducted its own

independent interviews of many of the potentially suspicious traders. The SROs, which

have extensive market surveillance departments, played a key role in the SEC

investigation by providing information and, in some cases, detailed reports to the

commission. In addition, the SEC directly contacted 20 of the largest broker-dealers and

asked them to survey their trading desks for any evidence of illicit trading activity. It also

asked the Securities Industry Association—the broker-dealer trade group—to canvass its

members for the same purpose.

The SEC investigation had built-in redundancies to ensure that any suspicious trading

would be caught. For example, the SEC reviewed massive transaction records to detect

any suspicious option trading and also obtained reports, known as the Large Option

Position Reports and Open Interest Distribution Reports, that identified the holders of

substantial amounts of options without regard to when those options were purchased.

Similarly, to ensure full coverage, the SEC obtained information from a number of

entities that play a role in facilitating short sales. Between these efforts, the work of the

SROs, and the outreach to industry, the chief SEC investigator expressed great

confidence that the SEC investigation had detected any potentially suspicious trade.

No Evidence of Illicit Trading in the United States

The U.S. government investigation unequivocally concluded that there was no evidence

of illicit trading in the U.S. markets with knowledge of the terrorist attacks. The

Commission staff, after an independent review of the government investigation, has

discovered no reason to doubt this conclusion.

To understand our finding, it is critical to understand the transparency of the U.S.

markets. No one can make a securities trade in the U.S. markets without leaving a paper

trail that the SEC can easily access through its regulatory powers. Moreover, brokerdealers

must maintain certain basic information on their customers. It is, of course,

entirely possible to trade through an offshore company, or a series of nominee accounts

and shell companies, a strategy that can make the beneficial owner hard to determine.

Still, the investigators could always detect the initial trade, even if they could not

determine the beneficial owner. Any suspicious profitable trading through such accounts

would be starkly visible. The investigators of the 9/11 trades never found any blind alleys

caused by shell companies, offshore accounts, or anything else; they were able to

investigate the suspicious trades they identified. Every suspicious trade was determined

to be part of a legitimate trading strategy totally unrelated to the terrorist attacks.

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Many of the public reports concerning insider trading before 9/11 focused on the two

airline companies most directly involved: UAL Corp., the parent company of United

Airlines, and AMR Corp., the parent company of American Airlines. Specifically, many

people have correctly pointed out that unusually high volumes of put options traded in

UAL on September 6–7 and in AMR on September 10.169

When the markets opened on September 17, AMR fell 40 percent and UAL fell 43

percent. The suspicious options trading before the attacks fueled speculation that al

Qaeda had taken advantage of the U.S. markets to make massive profits from its

murderous attacks. The allegations had appeal on their face—just as al Qaeda used our

sophisticated transportation system to attack us, it appeared to have used our

sophisticated markets to finance itself and provide money for more attacks. But we

conclude that this scenario simply did not happen.

Although this report will not discuss each of the trades that profited from the 9/11 attacks,

some of the larger trades, particularly those cited in the media as troubling, are illustrative

and typical both of the nature of the government investigation into the trades and of the

innocent nature of the trading. The put trading in AMR and UAL is a case in point: it

appeared that somebody made big money by betting UAL and AMR stock prices were

going to collapse, yet closer inspection revealed that the transactions were part of an

innocuous trading strategy.

The UAL trading on September 6 is a good example. On that day alone, the UAL put

option volume was much higher than any surrounding day and exceeded the call option