Revenue Decrease for a Pirate Company Listed on Somalia Pirate Exchange
The U.S. Navy rescued 13 Iranians held hostage by Somalia pirates.
The flip side of this rescue was that it decreased the revenue the pirates would have otherwise obtained for eventually returning the hostages. Therefore, those Somalis who might have invested in this pirate company probably listed on the Somalia Pirate Exchange lost money today as the price of this stock undoubtedly tumbled.
The Somalia pirate exchange, the Harardheere Stock Exchange (“HSE”), opened for business in 2009 in Harardheere, Somalia, about 250 miles northeast of Mogadishu. It operates 24 hours a day. Pirate groups of a certain size register to trade on the exchange. Currently the exchange lists 73 entities. Individual investors donate weapons or pay cash to buy shares of one or more of the registered groups. Thus, pirate groups can raise money and weapons for expeditions and local investors can share in the profit—receive dividends—if the expedition is successful. Just as in the usual corporate world, not all pirate groups are successful. Currently however, the pirate business is up; in the first quarter of 2011 there were 97 attacks off the coast of Somalia, which is a 177 percent increase over first quarter of 2010. Wired has a fascinating (excellent graphics), non-typical economic analysis of the Somali pirate business.