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Chapter 593 The Counterattack Begins

The series of positive news released by YueDong Games seems to have been blocked by the financial market.

On December 18, the short-selling alliance launched a full-scale attack.

From the moment the market opened, Nasdaq's electronic trading system was overwhelmed by a deluge of sell orders.

Many of these sell orders came from offshore companies with multiple layers of equity, but ultimately all pointed to a secret account on Wall Street.

The large number of sell orders flooding the market at this moment simply cannot be accompanied by corresponding stock lending certificates.

This is a typical naked short selling operation.

A flood of fake stocks entered the market, causing it to plummet below the $180 mark at the open.

"It's that same old fake lending trick again." A trader in Lehman Brothers' hedge fund division muttered under his breath at his desk, but fell silent when his supervisor walked in.

At 10 a.m., Richard Fuld, CEO of Lehman Brothers, appeared in the trading floor of the hedge fund department.

My gaze swept across the giant display screen on the wall, where the real-time game data was scrolling like a hawk's. The sell order queue was growing at a rate of hundreds per minute, while the buy orders were slightly insufficient.

Department head William Black went to greet him, his brow furrowed with confusion. Lehman Brothers hadn't participated in the short-selling attack on Leap Games, so why was the big boss here?

Fuld ignored him, staring intently at the constantly fluctuating empty order data on the screen.

Five minutes later, his expression suddenly turned grim, and he uttered a low whisper, "Wall Street is going to be a lamb to the slaughter."

"What did you say?" Blake thought he had misheard and instinctively asked.

At this moment, the naked short selling volume on the screen is approaching 800 million shares, while YueDong Games' stock repurchase quota is less than 400 million shares. The outcome seems to have been decided long ago. How could Wall Street become a lamb to the slaughter in the other party's mouth?

"I mean, Wall Street has fallen into Ernst's trap." Fuld turned around, his eyes filled with certainty. "Ernst's jaws are wide open, and this time what he wants is far more than just Continental Telecom."

William Black still didn't understand, and his brows furrowed even more.

Given the current situation, shouldn't it be YueDong Games that's the one waiting to be slaughtered?

"Today's short selling volume is estimated to reach 1000 million shares, and YueDong Games simply does not have enough chips to fight back."

William Black stared at the queue of sell orders on the screen, which stretched like an endless train with no end in sight.

Under such circumstances, how could Wall Street possibly lose this battle between bulls and bears?

Turning his head, he looked at Richard Fuld. "You mean Ernst Asset Management will make a move?" Wall Street isn't stupid; they've been keeping a close eye on Ernst Asset Management and the situation at the family office.

"According to Section 13 of the Williams Act, if parties acting in concert hold more than 5% of the shares, it must be reported to the stock exchange and made public."

"To date, there has been absolutely no news of this kind in the market."

Fuld let out a soft scoff, pointing his finger at the screen. "The entire market has been blinded by profit; everyone has gone mad, and no one is willing to turn back."

"If they just pay a little attention to the equity data, they will find themselves standing on the edge of a cliff, where any slight disturbance could send them plummeting into an abyss."

Blake followed his finger but still couldn't figure out the key point.

Upon seeing this, Fuld suddenly asked, "You just said that Citael has also joined the short selling?"

"That's right, they established a large number of short positions through the over-the-counter derivatives market yesterday," Black nodded in response.

"I don't need to explain what they're best at, do I?" Fold's question startled Blake.

Citael, a notorious market maker on Wall Street, is known for exploiting loopholes in option exemptions.

Simply put, it involves packaging inflated stock holdings into derivatives such as call options and credit default swaps to circumvent regulatory restrictions on naked short selling.

The short-selling forces on Wall Street are caught up in the situation without realizing it. But William Black, as an outsider, is quite clear-headed, only his mind has been swayed by the surface of the situation.

Richard Fold's expression changed instantly after he finished speaking.

If Citael is like this, what about other short-selling forces?

How many stocks are actually being nakedly shorted in this market?

"Get me the total short positions in Leap Games over the past two weeks, including potential short positions corresponding to OTC derivatives," Blake immediately shouted to his trading assistant.

Less than two minutes later, the assistant's voice trembled as he said, "Manager, including all pending orders and implied short positions in derivatives, the total short selling volume has exceeded 4800 million shares."

The number sent a chill down Blake's spine, and cold sweat broke out on his back.

He was very clear about the equity structure of YueDong Games, because he also planned to short YueDong Games.

However, Richard Fuld suddenly issued an order that Lehman Brothers would not participate in this round of bull-bear battle in the Leap Games, so the matter was dropped.

The total share capital is 1.5 million shares, of which founder Ernst still holds 12.3% after multiple rounds of financing. The Boston consortium and Silicon Valley investment funds hold a combined 15.7%, and Middle Eastern sovereign wealth funds and European family offices recently acquired at least 7.2% of the shares through share purchases.

These three parties have locked up 35.2% of the shares, totaling 5280 million shares.

This doesn't even include YueDong Games' buyback account and Ernst's hidden holdings. If we calculate based on the maximum value, it's another 20%.

And don't forget, there's also the employee stock option pool at YueDong Games.

These combined account for over 60% of the total share capital.

Even if it's 60%, that's still 9000 million shares.

What is the total amount of short selling right now?

It reached 4800 million shares.

The total number of shares, 1.38 million, is still less than the 1.5 million shares of YueDong Games, but William Black knows that this number is definitely excessive.

It's absolutely impossible that Ernst only owns the stocks he personally holds.

Furthermore, with so many overseas shareholding institutions in YueDong Games, it's impossible for all of them to lend out their shares.

Furthermore, once Ernst Asset Management and his family office issue an announcement that they have accumulated more than 5% of the shares, will they stop their continued buying?

This is absolutely impossible.

"This is insane," William Black muttered to himself, suddenly realizing that "once the bulls start to fight back, short sellers won't be able to borrow shares to cover their positions, inevitably triggering a short squeeze." Then, a greedy glint flashed in his eyes, and he turned to issue a trading order: "Buy Dynamics Games stock, we..."

He was about to say that he wanted to let Lehman Brothers act as a stock manipulator and take control of Wall Street, but Richard Fuld stopped him by raising his hand.

"Wait," Fuld raised his hand to stop him. "Lehman is not involved in this game."

William Black looked puzzled. "Why? I suspect that at least a third of the short positions in the market right now are naked shorts. We could make a fortune."

He could interpret the previous ban on short selling as a sign that he was optimistic about YueDong Games.

The outcome is clearly decided now, so why not participate?

Richard gave a wry smile. "Because of this operation to hunt for the Leap Game, Goldman Sachs informed everyone when the Leap Game went public."

William Black deflated instantly, knowing that if Lehman Brothers entered the fray at this point, it would be breaking the rules.

I glanced at the stock price of Leap Games, which had fallen to $168. This is blatant wealth.

Considering the positive news released by YueDong Games in the past two days, he couldn't believe how high YueDong Games' stock price would rise.

Just as he was imagining this, Humphries' phone suddenly rang. After answering, his expression changed, and he said to Richard Fuld, "Dynamic Games will be holding a press conference at 5 p.m., and Pervin Houston from Ernst Asset Management will also be attending."

Everyone knows. A counterattack.

it has started.