Position Flipping (2)

How was he supposed to dump this toxic inventory?

Seo Seong Securities scrambled frantically for a way to offload their Facenote holdings.

"Sell…"

"…We can't. We're underwriters. Lockup."

Six full months of it.

"Hold…"

"…We can't. With three hundred billion won locked up, our participation limits on new IPOs get capped."

Which was why firms usually cleaned house within a year.

Someone floated an idea.

"What if we transfer it to the trading desk? Once the lockup lifts, we sell it off bit by bit…"

"…We can't. Everyone else is thinking the exact same thing."

The second the lockup expired, sell orders would flood the market and drive the price even lower. Seo Seong Securities would pile on with the rest of them, of course.

"We'll take mark-to-market losses every quarter."

"…"

The real problem was that every other institution was suffering the same agony. They'd come in at the IPO, and now they could only sit there watching quarterly losses mount, unable to sell. At least they had someone to blame.

"Why the hell did you buy this?"

"Seo Seong Securities recommended it hard!"

"Those bastards at Seo Seong. Wait till I have to work with them again!"

The people responsible at Seo Seong Securities tore at their hair. As if the headache weren't enough, they were getting cursed out left and right—and a time attack was closing in.

"Ahh… no… Quarter-end is coming! We have to deal with this before the numbers hit the books."

"Damn it! Is there any way to get this toxic inventory off the books without selling it?"

That was when the way spoke up.

"Shall I dispose of the garbage for you?"

President Seo turned Lee Jaseung's business card over in his fingers.

"Makers. You said you do consulting. May I call you Mr. Lee, then?"

"Of course."

In the industry, consultants were usually addressed as "Mr."

"Fine, Mr. Lee. You'll dispose of our toxic inventory?"

"Yes. I intend to raise a one-trillion-won fund. A fund dedicated solely to absorbing Facenote inventory."

A side pocket. A vehicle that peeled toxic assets out of the books and handed them to a specialist ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠manager. And he was proposing it at a scale of one trillion won. President Seo's eyes lit up.

One trillion is more than enough to take every last unsold share.

There was a lockup, yes—but that was only meant to keep anyone from dumping blocks into the open market. A block deal like this was fine.

"At what price?"

"Seventeen dollars."

"You know Facenote has bottomed and rebounded as high as nineteen, I assume?"

President Seo pushed back. At minimum, pay market.

Lee Jaseung only crossed his legs, unhurried.

"If you'd rather not, you're free to sell into the market. Though I do worry. Nearly every institution on earth will unlock at roughly the same time. How far the price falls is anyone's guess…"

The pity on his face was thoroughly infuriating, but President Seo had no choice but to concede the point.

"…Handing it to you is better than dumping it on the market. But you do know we underwrote at thirty-one dollars?"

"Yes. You'll take a forty-five percent loss. If that doesn't sit well, you're welcome to wait—until Facenote climbs back to thirty-one."

Impossible. When would that day come? A year? Two? In the meantime Seo Seong Securities would have three hundred billion won frozen solid, capital adequacy rotting by the quarter.

"But if you sell to me, you clear the inventory and free up cash. One hundred seventy billion in proceeds. And…"

Jaseung paused, the corner of his mouth lifting.

"You invest those proceeds in my fund."

"…?"

President Seo looked at him as if he'd lost his mind.

"What? We hand over the stock for a measly hundred seventy billion, and then pour that same money back into your fund?"

Jaseung was unfazed. Raising a one-trillion-won fund was no small task. High-net-worth clients like Han Juhyeong only went so far. Institutions had to step up eventually.

He continued as if nothing could be more natural.

"Facenote is a long-term appreciating asset. This is the bottom. Seo Seong Securities stands to make money on the recovery."

President Seo laughed in sheer disbelief.

This highway-robbery little bastard?

Thirty years in finance. He had watched every filthy deal and backroom cut imaginable, and sometimes run them himself. He had never heard a proposal this shameless.

"Listen, Mr. Lee. Make some sense. We put up the stock and we put up the capital, and for the privilege of using your fund we still pay management fees and performance fees on top? Why would I do that?"

"Plenty of reasons. For one, your books come out clean."

Convert "holding toxic inventory" into "holding fund units," and a loss becomes an investment.

"More precisely, the books of every institution that lost money because of Seo Seong Securities come out clean."

"…!"

"Quarter-end is breathing down everyone's neck, isn't it? They're all wringing their hands over how to dump the toxic inventory."

Jaseung smiled thinly.

"Here it is. The exit."

"Hmm."

President Seo made a low sound in his throat.

The one-trillion-won Facenote fund. What Jaseung had walked in with was the only solution that moved inventory without breaching the lockup. And more than that—

In finance, the network is as important as the money.

Seo Seong Securities was on the verge of losing both. Institutions were staring at hundreds of billions in mark-to-market losses.

Saying sorry, eat the loss yourselves was one thing. Saying I brought you an exit was far better.

Which means Seo Seong has to be the largest investor.

There was no way around it. They needed Jaseung's fund to clear the inventory. But if Seo Seong didn't lead, no one would trust the vehicle. Only a signal that we put in the most would pull the other Facenote losers in behind them.

President Seo ran the numbers fast.

Clean the books, hand the institutions an exit, and on top of that…

Greed stirred.

If we intermediate a one-trillion-won fund, Seo Seong Securities takes a fee cut too.

Of course the biggest winner would be Lee Jaseung—scooping up Facenote at a fire-sale price, running a colossal one-trillion-won book, and pocketing enormous fees along the way. But for Seo Seong Securities, it was still better than the worst case.

President Seo shifted, a polite smile settling into place.

"If we follow your proposal, we stand to gain a great deal. So which brokerage are you planning to place this one-trillion-won fund with?"

Hooked.

Jaseung smiled inwardly. He had never considered anyone but Seo Seong Securities. But he doesn't know that—so I can squeeze him harder.

"Hard to say. I'm looking at several houses. We ran the short strategy with NB Securities last time, and… well, I'll go with whoever offers the best terms."

"So you want to negotiate. Fine. I'll play along."

President Seo folded his fingers one by one as he laid out the terms.

"One: fees at the lowest level in the industry. Sales commission of half a percent, brokerage fees minimized. Two: unlimited access to every report from our research center, plus personal advisory from the analysts. Three: first priority on every investment opportunity Seo Seong underwrites—IPOs, block deals, convertibles, anything. Well? That's full VIP treatment. Frankly, even the direct bloodline of the Seo Seong Group doesn't get terms like these."

"An excellent offer. I'm grateful."

Better than expected. But it wasn't finished.

"I'd like one more thing written in."

"What?"

Every move until now had been paving the way for a single prize: a foothold deep inside Seo Seong Securities. Not mere VIP-client status, but a position from which he could exert real influence from within.

An external advisor to Seo Seong Securities. Which committee?

It was a delicate problem. He would be both an advisor to the firm and one of its clients—room for conflict of interest. A seat that has nothing to do with individual investments, but still lets me look into overall management.

"I'd like a seat on the Management Advisory Committee."

After Lee Jaseung left, Seo Minju hurried to the president's office and heard the whole story from her father.

"So… Lee Jaseung takes our money as an investment, and uses it to buy our stock. At seventeen dollars."

"That's right."

"And Seo Minjae runs the one-trillion-won fund?"

"That's what the PBS desk is for."

"And on top of that, Lee Jaseung joins the Management Advisory Committee?"

"Yes."

Are we the marks here?

Fortunately, Seo Minju still had enough self-control not to say that last part out loud. Reading the displeasure on his daughter's face, President Seo spoke.

"Minju. This is choosing the second-worst option over the worst. The deal cleaned our books. It's a five-year fund—we may even see investment gains down the line. But more important than that: it gives us a chance to repair our relationships with the other institutions."

From Seo Seong Securities' standpoint, second-worst was exactly right. From Seo Minju's—

It's the worst!

Lee Jaseung had already been dangerous enough outside the firm. And now they were inviting him inside—with an official title?

I can't even touch him now.

A one-trillion-won flagship fund would draw every major institution. Even if the PBS desk reported directly to her, she couldn't casually interfere with a project of that scale. Seo Minju felt genuine crisis for the first time.

"Father, the truth is Seo Minjae and Lee Jaseung…"

"Have joined forces?"

"You knew?"

"Is there anything you know that I wouldn't? Succession consulting, was it? An amusing little business."

President Seo gave a quiet snort—not mockery, but the fond, paternal laugh of a man saying you think the father who raised you wouldn't notice?

"So? Lee Jaseung chose the Management Advisory Committee. What does that body do? It's a room full of subordinates who manufacture justifications after management has already decided. You think a man with not a single share and not a single vote can unseat a president from there?"

"No, but…"

"Minju. This is an opportunity."

"An opportunity?"

"Meeting him made it clear. That one knows how to fight. But…"

But Seo Minju never had. The path ahead of her had always been lined with flowers, and she'd had Seo Minjae as a human shield. Seo Seong Securities' princess. The nickname hadn't come from nowhere. For the succession, though, she had ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠to be taught.

"Lee Jaseung is inside Seo Seong Securities now. Fight him. Watch him. Learn from him. Become like him."

And once he'd outlived his usefulness, she could cut him down.

A one-trillion-won fund. Full long on Facenote alone.

The man who, only days earlier, had been pouring gasoline on Facenote had suddenly turned fireman. Who could possibly sit on a rumor that delicious?

Yeouido boiled over again—and when the news reached Chae Eunchae, she nearly lost her mind.

"I was going to do that first!"

Raise capital and launch a Facenote-only fund. The exact play she'd been lining up—and Lee Jaseung was already running it. At a vastly larger scale. On far more aggressive terms. And, without question, far more successfully.

Chae Eunchae groaned.

"A master. Oppa's a master."

In a falling market, harvest the downside. In a rising market, harvest the upside. Flipping a position on that precise a clock was something most fund managers didn't even dare attempt.

One question remained, though.

"But one trillion? How long is that going to take to raise? Did he misread demand?"

She was still tilting her head when the news hit.

"?"

Chae Eunchae clicked through in a hurry.

"…? A hundred fifty billion? Weren't they on bad terms with Seo Seong? How did he work them over?"

With Seo Seong Securities in the lead, the other institutions choking on toxic inventory followed. Originally, none of them had intended to put another won into a fund.

Facenote? Can't stand the sight of it. Dump the inventory and cut the loss.

But Seo Seong's sales team refused to quit.

"If you secure fund units, ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠you can also capture the upside when the stock recovers!"

"What? Double down on the Facenote that already burned us?"

"Which is why we've prepared a compensation package."

Priority allocation on the next IPO. First call on block deals. VIP research service…

The institutions' expressions softened a fraction.

Hmm. If it's that…

They'd taken the hit and wanted a path to make it back.

Facenote is a stock that will go up eventually. Eventually…

And if the compensation package includes Seo Seong itself putting in a hundred fifty billion, that at least signals confidence.

Once you've locked in the loss, you can't just rebuy the same name—so a fund is really the only answer.

The perception that it was a fund safe enough for a major securities house to invest in spread fast—and that alone became a powerful seal of approval. Institutions and high-net-worth investors alike showed up with bags of cash. The raise filled almost immediately.

It was vacuuming up investors like a industrial cleaner. The problem was that her clients were getting sucked in with them.

"We've decided to do this Facenote allocation through Makers."

"Excuse me? We were running the same trade out of our fund…"

"Well, Makers is at a one-trillion-won scale, so the fee terms are just overwhelmingly better."

"How much? I'll match—"

"Seventeen dollars, one percent management fee, ten percent performance fee."

…She couldn't match that.

Seventeen dollars was two dollars under Facenote's market price! And he'd cut the fees in half on top of it? Did this man have no professional ethics at all?

That was the economy of scale. A corner shop never stood a chance against a big-box discounter.

"My clients…"

Those clients had already wanted Facenote exposure, and Jaseung had launched the fund at the perfect moment. He'd already proven his skill with absurd returns. There was no reason not to go.

"Blew Yuseong Steel, blew Facenote, blew the clients. This quarter is wrecked. Completely."

Muttering glumly, Chae Eunchae dialed Lee Jaseung.

Her stomach could burn all it wanted. She still had money to make.