A pirate organization has come together in Haradhere, a small coastal town in Somalia, in 2009. To help them survive, they created their own pirate stock exchange for investing in criminal activity. They hunt the waters of the Indian Ocean and the Gulf of Aden, which links Europe to Asia through the Red Sea.
They have arranged themselves into “companies,” initially starting with 15 of them in the exchange. Since then, that figure has ballooned to 72. The companies had made millions. Lately, they’ve been charging about $4 million for a ransomed ship. Much higher than the original $2-3 million they used to charge before the investments took off. A Reuters article has the following quote from one of the leaders of this operation:
The shares are open to all, and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”
Even the town gets a cut of the ransoms to pay for desperately needed infrastructure. The government doesn’t have the resources to stop this due to fighting rebels backing from The West. Without many other prospects, this sadly leaves many young men lured to the life of piracy.
Some of the other shocking quotes come from a young divorced woman who donated part of her settlement:
I am waiting for my share after I contributed a rocket-propelled grenade for the operation.” She also added: “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”
The pirate stock exchange is likely not going to be a viable replacement for the S&P 500. However, it’s still an interesting phenomenon to keep an eye on.
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