A Devil's Bargain
The calm before the storm at the Taewoong Foundation.
The "Taewoong Foundation" was the umbrella term for the network of social welfare corporations that had grown out of the Taewoong Culture Foundation, originally established by Chairman Kim Young-hoon. Currently, it was run by Kim Young-hoon's younger brother, Chairman Kim Dong-ho. To me, he was my granduncle.
And right now, I was sitting directly across from him in his private office.
"Haha, well now. Let's hear what you have to say. What brings you all the way here to see this old man in person?" Chairman Kim Dong-ho chuckled warmly, his face the very picture of grandfatherly benevolence.
But I knew better. I had chosen Kim Dong-ho as my ally to wipe out both Kang Minwook and Choi Jae-young in one fell swoop. To the untrained eye, he might look like a toothless tiger, but in reality, he was a viper hiding in the grass—shrewd, calculating, and incredibly dangerous. I had come here today to pitch him a deal.
"Yes, Granduncle. First, let me lay out the situation."
"Go on, then. I'm listening."
Whew... I had to admit, my heart was racing a bit. He was the kind of man whose reaction was entirely unpredictable if things went even slightly sideways. But I couldn't afford to show any weakness here. I locked eyes with him, refusing to look away.
"I believe you're already familiar with the recent Unilabs short selling incident."
"Of course I am! My brother made quite a handsome profit from it. He couldn't stop bragging about you, Sung-woo, haha!"
"It seems that because of that, Mayor Kang Minwook has developed quite a grudge against me."
"Well, naturally. They must have staked everything on that little scam of theirs before you blew it to pieces. Cleaning up that mess must have been an absolute nightmare for them."
Haha, look at him drawing the line already. This old viper was testing me. He wanted to see what cards I was holding before deciding whether to jump in. It was a bit shameless of him to try and get a free ride, but it didn't bother me in the slightest.
"He was so furious that he cooked up a rather insidious plot."
"Haha, well, Kang Minwook is indeed a master of underhanded tricks."
"Short selling. He intends to destroy Leonplay through a massive short-selling campaign."
"Hmm?" Chairman Kim Dong-ho tilted his head, looking at me with newfound interest. "Leonplay isn't small enough to be brought down by mere short selling, is it?"
"You're absolutely right. The Leonplay I've built is on a completely different scale now."
Leonplay's market capitalization, which had once been a mere 70 billion won, had now surpassed 200 billion won. As he said, Leonplay was no longer small enough to be brought down by a petty short-selling scheme designed by someone like Kang Minwook.
"It's impossible with the kind of funds Kang Minwook can mobilize on his own."
Sure enough, he immediately grasped the core of the issue. Kang Minwook simply didn't have the liquidity to pull off a stunt of that scale. At least, not if the stock market operated on common sense.
"It is possible."
"How?"
"CFD."
"...!"
CFD—Contract for Difference. It was an over-the-counter financial derivative that allowed traders to speculate on price movements and settle the difference in cash without actually owning the underlying asset. In simpler terms, a brokerage firm would buy and sell the stock on behalf of the investor, and the investor would settle the profit or loss based purely on the price fluctuations. So, what made this different from buying and selling stocks directly?
"Haha, so you're saying that scoundrel Kang Minwook is using CFDs to leverage his short selling?"
"Exactly."
Leverage. Derived from the physical principle of a lever where a small force can move a heavy object, it was an extreme high-risk, high-return investment method that allowed traders to control massive sums of money with very little capital. In short, it was investing with borrowed money. The primary reason anyone used CFDs was for this exact leverage. Depending on the stock, traders could leverage their position up to ten times. This meant that under the right conditions, a trader could control 1 billion won worth of stock with only 100 million won of their own capital. Kang Minwook and Choi Jae-young had undoubtedly maxed out their leverage through CFDs to execute this short-selling campaign.
"...So, do you have a countermeasure?"
"Of course."
A cold, chilling smile played on my lips. Kang Minwook must have racked his brain desperately to design this trap, but unfortunately for him, the fatal flaw in his blueprint was glaringly obvious to me.
"Twenty billion won. I need you to invest a total of twenty billion won in Leonplay under the name of the Taewoong Culture Foundation."
"Hmm. You wouldn't be asking for a favor for free. What are the terms?"
A sharp, predatory gleam flickered in Chairman Kim Dong-ho's eyes. Now that he had taken the bait, it was time to reel him in. It was time to whisper a devil's bargain into his ear—one he couldn't possibly refuse.
"If you invest twenty billion won, I will guarantee you make at least three times that amount back."
"...?"
"Kang Minwook will likely dump his short-selling volume during Leonplay's upcoming major collaboration event, using tax audits and accounting audits as his weapons."
"Naturally. A bomb detonated when the crowd is thickest always yields the highest casualties."
"What you need to do, Granduncle, is simple."
I smirked. Kang Minwook probably wanted to pay me back in the exact same coin. But what could he do? His desperate struggles were nothing more than a child's tantrum to me.
"You just need to use CFDs to leverage your position, exactly the way Kang Minwook did."
"Could it be...?"
"Yes. Since Kang Minwook has taken a short position, you will take the opposite position—long—and absorb every single share he and his forces dump into the market."
Chairman Kim Dong-ho's role, simply put, was to act as our tank. Why ask him instead of absorbing the short-selling volume myself? First, it never looked good for a CEO to directly buy up shares to defend their own stock price. Second, I wanted to leverage the sheer weight of the Taewoong name. The Taewoong Culture Foundation stepping forward to make a twenty-billion-won investment was, in itself, a massive positive catalyst. If the short-selling volume poured out at that exact moment was completely swallowed up by a single entity, the public would naturally assume Taewoong had stepped in to shield the company.
"What an audacious brat. You plan to use Taewoong's name to stir up a storm."
"For merely lending your name, the fruits you harvest will be incredibly sweet."
If I had to describe the Korean stock market in a single word, I could answer without a second of hesitation: Madness. Is there any word that fits this market better? Even companies with absolutely no relation to each other get tied together as "themed stocks" the moment a rumor starts circulating. 'Taewoong Group and Leonplay are under the same umbrella.' Once that rumor caught fire, the flames would grow out of control, eventually engulfing the entire stock market. A large-scale accounting and tax audit? I could guarantee that would be nowhere near enough to put out a blaze of this magnitude.
"If we absorb the short-selling volume as soon as it's dumped, and on top of that, a massive positive catalyst explodes, driving the stock price through the roof?"
"...A margin call."
Bingo. Short selling was not a silver bullet. If you sold shares you didn't own, it was only natural that you had to buy them back to return them. But what happened if you had to buy back shares you sold cheaply at a price several times higher? Moreover, when everyone wanted to buy a stock that was guaranteed to rise, who would sell? By the time the repayment date arrived, the remaining volume in the market wouldn't even be a fraction of what Kang Minwook needed to cover his position.
"When the short-selling repayment date arrives, the brokerage firm will execute a forced liquidation."
"If that happens, that scoundrel Kang Minwook will suffer trading losses overwhelmingly greater than the margin he put up."
"Yes. Then, naturally, the brokerage firm will demand payment from Kang Minwook for the difference. Of course, since he must have scraped together every penny he had to dump into this, there is absolutely no chance he will be able to pay."
Absolute ruin. The merciless violence of finance would drag Kang Minwook and Choi Jae-young down to the very bottom of the abyss. By then, a living hell from which they could never recover would unfold before them.
"It will be a pretty lucrative way to line your pockets, Granduncle."
"Bwahahaha!!!!!"
Thud, thud! Chairman Kim Dong-ho burst into roaring laughter, slamming his massive, lid-like fists onto the desk repeatedly. It seemed he quite liked the board I had set up. I didn't even bat an eye, calmly sipping the coffee in front of me until he calmed down.
"Ha... haha... Now I see why my brother dotes on you so much."
"Can I take that as a yes?"
"A yes? Ha! I'd have to be crazy to refuse when you're practically handing me free money!"
I smirked. Everything was ready. Is this what people nowadays call "money printing" or "easy money"? I exchanged a satisfied handshake with Kim Dong-ho. The hour of judgment was near.