They Made a Killing
Did people who knew about secret, CIA-led coups use that information to game the stock market?

By Ray Fisman - Oct. 28, 2008

... [Following the CIA-led coup in Guatemala in 1954] ... With a U.S. puppet back in the president's mansion, UFC's profits were safe. But it appears the company wasn't the only beneficiary of this Cold War cloak-and-dagger diplomacy: A recent study by economists Arindrajit Dube, Ethan Kaplan, and Suresh Naidu argues that those in on the planning process also profited handsomely. By tracking the stock prices of UFC and other politically vulnerable firms in the months leading up to CIA-staged coups in Guatemala, Chile, Cuba, and Iran, the researchers provide evidence that someone—perhaps one of the Dulleses, Cabots, or others in the know—was trading stocks based on classified information of these coups-in-the-making.

This exposé is a contribution to the rapidly expanding field of "forensic economics," which tries to understand the who, what, and why of illicit transactions. Since these are activities that take place out of sight (at least when they're done right), researchers are forced to look for fingerprints left in the data by smugglers, bribe-taking politicians, and other lawbreakers.

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