The individual that attacked Borussia Dortmund's bus sought to drive down the team's share prices and enrich himself. Economist Max Otte talks with DW about how the plan failed, and the fact it is an isolated incident.
DW: We now know that greed was the motive for the recent bomb attack on the Borussia Dortmund team bus. The perpetrator had hoped to kill as many players as possible and in turn profit from the team's plummeting share prices. Is this an exceptionally devious example in the history of market manipulation?
Criminal manipulation has always existed. But this instance was exceptionally criminal, and therefore represents an entirely new quality. Such acts are very rare, but I would not say that this case was entirely unique. And I would add that the perpetrator in the Dortmund case was extremely dumb in allowing himself to be apprehended. I suppose there have been a few such cases throughout history, but not all that many.
Can you think of any other cases in which individuals attempted to manipulate markets through violent means?
There are theories that individuals possessing warrants* greatly enriched themselves after the attacks of September 11, 2001. I cannot disprove that rumor. There is no concrete evidence, but I would not rule out the possibility. One is quickly labelled a conspiracy theorist when speaking of such things in relation to 9/11, nevertheless, many unanswered questions remain. In my opinion, it is quite possible that Osama bin Laden may have held such warrants. For me, 9/11 is the most glaring example of how something like that could happen. But I cannot think of many other cases.
We are speaking about physical violence, but that is not the only way to influence markets. What other ways can you give us?
Oh, there are many. It is well known that speculators sometimes attempt to corner markets. One of the most spectacular cases took place in the late 1970s, when the Hunt brothers tried to buy up the silver market in order to manipulate trading prices. Or in 1992, when George Soros bet against the British Pound and helped drive down prices by short selling - in the end he made a lot of money.
Such activities fall in a legal gray zone. But what about truly criminal manipulation?
It has often been said that the Rockefellers killed off competitors in order to create their oil and rail empire. But none of that can be proven. Today, a lot of cases still go unsolved. Our criminal authorities have never been all that successful at combating the phenomenon. I assume a great deal of market manipulation takes place, and that the number of unrecorded cases is very high.
The Dortmund bomber wanted to get rich with warrants. These allow a person to make a great deal of money with very little financial risk. Do such mechanisms spur criminal individuals to take matters into their own hands in order to influence share prices?
Well, first you have to have the criminal mindset of the Dortmund bomber. In general, I would say that warrants might animate the gambling potential of individuals because they feel as if they have a personal opinion about a particular share value. It is an incentive to gamble, but it does not increase the willingness to commit a criminal act - that is a stretch.
Had the entire Dortmund team been killed in the attack, the club's shares would likely have plummeted the next day and the bomber would have gotten rich. Was there a chance that his plan could have succeeded.
If it had gone off as planned then he could have succeeded in the short term. But it is hard to imagine that no one at the bank would have noticed that someone who previously had no business dealings with them had suddenly become very active. But if people aren't as stupid as the Dortmund bomber obviously was, and are professional, then yes. There are no doubt a large number of undocumented cases that have succeeded. The same has to be said in the area of short selling**, which functions similarly.
Max Otte is a German economist and professor at the University of Applied Sciences, Worms. He is also a mutual fund manager and founding member of the Institute for Asset Development (IFVE).
* Warrants guarantee investors the right to buy and sell stocks at a certain price for a specified amount of time.
** Short selling is an agreement between a buyer and seller on the future sale of a security. The seller does not own the securities that he or she later sells, thus, these are often also referred to as Borrow Shares.