Chapter 18
CHAPTER 18
NextMove situation grew out of control.
[FBI, undertaking investigation on NextMove!]
[NextMove CEO, Xiaodi Hou emergency arrest at airport!]
[CHD Investments revealed through official statement, "We are not related to NextMove's technology leak."]
Articles related to NextMove poured every day in US. FBI undertook investigation in earnest and SEC also stepped out to cooperate. Plus CEO arrested and CHD which was money line drew line. Naturally related companies also started to take hands off.
[Nvidia also drew line with NextMove. "Xiaodi Hou tried to leak our technology too." revealing clearly they are victim.]
[NextMove stock price 3 days consecutive fall, stock price which was highest 60 dollars fell to 22 dollars after Wall Street Journal exposure.]
Record plunge came out. Stock price which was 60 dollars broke beyond half to 1/3. In US stories were going on whether NextMove leads to delisting. And what this meant was one thing.
"Exceeded 207 million dollars! Yield is 58.79 percent!"
Meant KH Capital's profit is increasing geometrically.
So this is why falling into swamp of short selling.
Didn't know first short selling in life would bring this much profit.
"Falling with tremendous speed as soon as FBI bites."
"FBI stepping out means related to national security not financial crime. Don't know but CIA might have moved under water."
"Wow... feel like watching some movie."
To ordinary people FBI, CIA were stories plausible to see or hear in movies or US dramas. Although people quite present in financial side, story related to this side was also first time. At that time Gwang-ho sent glance to Gang-hyeon. Gang-hyeon catching that signal spoke.
"Now, everyone watching market please let know immediately if new news comes in."
"Understood."
Gang-hyeon entered CEO office with Gwang-ho. After closing door, Gwang-ho spoke.
"FBI side might investigate us."
"Us?"
"Yeah. Of all times we took short selling position massively right before stock price fell. This is suspicious whoever sees."
Correct. Too suspicious even if suspicious. If SEC and FBI cooperate and start investigation clear to be dusted soon.
"Will be dusted until one grain of dust."
"Right. FSS (Financial Supervisory Service) will come in."
FBI has no investigation right in Korea. Then can't investigate? No. Can do. Just have to ask cooperation to Financial Supervisory Service not themselves. And FSS will dust like catching lice.
"Plus our previous transactions are also strange for others to see."
Excluding Bitcoin. Difficult to dust transaction details there. No, if FBI might be possible. Couldn't underestimate their investigation power. Anyway remaining in record is maintaining Nasdaq long position. Put in and pulled out at appropriate timing. Didn't catch at head nor bottom. Still 100 percent win rate was suspicious. Clear to bite and hang on.
"Our side should prepare too."
"Right. From one to ten, have to finish all preparation."
Have to prepare thoroughly. Because that much they were clear to bite and hang on scarily.
FBI started investigation cooperation with SEC.
"Look at this."
Soon discovered strange point.
"Someone took short selling position right before NextMove stock price fell."
"Scale?"
"6.6 million shares, over 300 million dollars."
"Where is broker?"
"JP Morgan."
"Go immediately and tell to hand over transaction details!"
"Understood!"
Investigation net of US best organizations SEC and FBI was narrowing gradually.
FBI moved. What this word meant to market was one thing.
"Informed that recall request for 3 million shares came from JP Morgan desk."
NextMove might go bankrupt. Naturally investors holding stocks started throwing in market. Opponents who lent stocks also had no reason to shoulder risk. Naturally requested recall and JP Morgan desk requested KH Capital to return stocks.
"Deadline?"
"Says they will block until tomorrow, but difficult beyond that. However, said have to raise interest to 50 percent."
Annual interest rate 50 percent. Practically demanded premium. In case of normal stock interest rate was within 0.5~3 percent. NextMove was soaring stock so annual interest rate of 15 percent was appropriated. Moment this becomes 50 percent, what it meant was one thing.
"JP Morgan also judged NextMove dangerous."
"FBI investigation is scary indeed."
Now moment of choice. Current stock price was at moment of breaking 20 dollars or not. Normally clear to go to side maintaining position paying premium here. But different thing was seen in Gang-hyeon's eyes.
"Accept recall request and enter stock purchase in market. And will organize remaining volume sequentially too."
"Understood! Entering stock purchase."
Decision not fitting market logic. But this time Seong-won entered stock purchase without being late. Gang-hyeon smiled watching him placing order.
Seems adapted now.
Hesitation disappeared from him. Watching him performing operator duty faithfully moved gaze and checked monitor.
Changed to gray. Means continuing sideways for time being.
Blue color emitting from NextMove changed to gray. What this meant was one thing. Meant price will go sideways. Stock was originally like that.
FBI investigation started, but indictment will take minimum one year. So price will fall moving up and down. No reason to bet current profit on event not knowing how to proceed in future.
Shall start negotiating CDS slowly too?
Most perfect timing to hand over CDS again. Gang-hyeon returned to CEO office and picked up receiver.
"This is Gang-hyeon. Intend to negotiate related to NextMove CDS."
Expected to some extent. Negotiation like CDS tycoon was bound to come out from opponent side as number repeats.
Didn't know head office personnel would come out in second negotiation, but that much big event. This was also inside expected range.
"Yes, okay. Where shall we meet?"
"Understood."
Can leave trading to Gwang-ho and Kim Seong-won. Accepted readily and waited then moved riding car Lee Jong-hyeok sent. Place arrived was Shilla Hotel. Met Lee Jong-hyeok there and moved to suite room. Waiting inside luxurious and wide room was.
"I am Richard Blake of JP Morgan Chase. In charge of Brokerage Managing Director."
This... Was outside expected range.
Managing Director corresponds to executive director in Korea. Meant executive representing one field or region. Didn't know tycoon of this degree would visit Korea directly in second negotiation. Moved gaze slightly and looked at Lee Jong-hyeok. Expression or movement every single one looks difficult. True, not direct boss but highest executive of head office marched directly. Natural to show such reaction.
Honestly not very nervous though.
Self was different. Trading partner anyway and now self was A (superior). NextMove ruined and value of CDS skyrocketed. Meant nothing to be honeyed. Richard also was interested in such Gang-hyeon's reaction.
Most people meeting me first time either nervous or bluffing. One of two, but this man is different.
Didn't tremble nor bluff. Just observing self without word. As if saying bring it up first if have something to say.
Knows his position exactly.
Such reaction was what comes out when this side has to bow head. Meant man named Choi Gang-hyeon knows he is A. Then have to bow and enter.
Richard putting down tea cup opened mouth.
"Glad to meet CEO of KH Capital who left two impressive transactions directly like this."
"Honor to meet Director of JP Morgan directly too."
Exchanged simple greeting.
"Reason I came to Korea directly is to purchase CDS CEO is holding."
Brought up main point. Anyway what both sides wanted was clear. No reason to hide.
"CDS CEO set is 370 million dollars. Set at very nice timing. Timing perfect enough to be respectful."
Could sound like sarcasm if heard roughly. But could know it's word from sincere heart from his tone or eyes etc.
"Thank you."
"Just told fact. Anyway value of this CDS skyrocketed in current market. Since NextMove is state no different from candle in front of typhoon now."
Correct words. WSJ exposure. FBI official investigation undertaking. Plus incident CEO arrested at airport burst consecutively. This was no different from admitting crime practically. To bring out all cards up to here. Thought occurred amazing nobleman. But his main point was starting now.
"However will take quite time until NextMove goes bankrupt."
CDS was contract receiving money only when company goes bankrupt. And that money settled only after organizing bankrupt company and confirming how much recovered. In other words, needed time. Before that value of CDS was only book profit, not actual profit. Richard pointed out that part clearly. And Gang-hyeon was also considering this part.
"Before that can raise leverage more in banking sector with book profit as collateral so no problem in fund operation."
Even if not holding profit in hand many ways to change to money. One of them is receiving loan holding value of CDS as collateral. Although such product wasn't in commercial banks, not problem. Since bank is originally place giving loan holding as collateral if judged valuable item. And this answer was answer Richard exactly wanted.
Wondered just in case since handling CDS for first time, as expected not clumsy man.
Not man simply having beast's heart. Smart and strong. Expectation arose that if this man shows greater appearance in financial district in future. No more tug of war needed for person wanting to continue connection more.
"Let's do this. Currently spread of CDS is appropriated at 38 percent."
"Rose a lot."
"Correct. Calculating with current value it's 126 million dollars."
Value of CDS bought with 20 billion premium exceeded 100 million dollars. But CDS wasn't traded in this way. Richard also knowing that brought up main point immediately.
"As you know, amount recoverable from venture company like NextMove is about 10 to 15 percent. Calculating with amount it would be about 315 million dollars to 333 million dollars."
"Yes, know well. But that amount is amount receivable only after company goes bankrupt anywhere."
"Correct."
"Let's enter main point now. What is price JP Morgan wants to purchase?"
Important thing is here. JP Morgan purchases CDS in situation company not bankrupt yet. Reason is various. JP Morgan itself invested in NextMove or there might be trader who took long position massively. In that case CDS was very attractive card for hedge. And another thing is JP Morgan could wait until enterprise like NextMove collapses. In other words, intending to purchase because calculation stands that can buy CDS cheap and recover expensive. If high executive like Richard came up to here calculation must have ended already. Gang-hyeon waited for price to come out from his mouth.
"Price we want is..."
Price finally came out from Richard Blake's mouth.
"200 million dollars."
Moment 20 billion betting returns as 280 billion.
(End of Chapter)
— Translated by Prime Works —