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Chapter 594 Lock-up

At 4:55 PM, at the press conference for Leap Games.

The entire press conference hall was packed to capacity, with financial media from all over the world crowding the venue. Reporters had their cameras and recorders ready, all pointing at the main stage at the front of the hall. The spotlights shone through the crowd, creating a flowing net of light as they recorded every detail of this press conference, which was seen by outsiders as a death throes.

When Leap Games CEO Ryan Ruiz and Ernst Asset Management partner Pervin Houston walked into the venue side by side, the previously noisy hall fell into a brief silence, followed by a chorus of murmurs.

"What other tricks can they pull? It's just a last-ditch effort by cornered beasts." In the crowd, a reporter from a New York financial media outlet whispered to his colleague, his tone clearly contemptuous.

At the close of trading today, YueDong Games' stock price had fallen to $162.

Financial media outlets are already predicting a downturn, with all news outlets saying that YueDong Games will fall below $160 tomorrow, and may even drop to the $150 range.

Bloomberg went even further, issuing a liquidity crisis warning and arguing that without substantial external capital intervention to act as a white knight, YueDong Games would face the risk of being completely besieged by short sellers.

Against this backdrop of public opinion, YueDong Games' decision to hold this press conference seems to most people more like a gesture of helplessness.

The reporters exchanged glances, all wondering the same thing: what bargaining chips does this game company, mired in a vortex of capital, still have left?

Of course, not all media outlets were just watching the spectacle. For example, a reporter from the Los Angeles Times next to him glared at him with displeasure, as he disliked the condescending attitude of New York media professionals.

At 5:00 PM sharp, the press conference officially began. Ryan Ruiz calmly surveyed the entire room. "Thank you to all the media friends for attending tonight's event, a press conference that could potentially reshape the gaming industry and even reshape the rules of the financial markets."

His voice resonated throughout the hall through the sound system, steady and powerful, a stark contrast to the overwhelmed image of the CE as rumored.

Many reporters noticed the confident smile on his face, which showed no sign of fear of impending crisis but rather an air of shrewdness and composure, causing them to frown slightly.

It changes the landscape of the game; that's absolutely true.

If YueDong Games were to collapse, it would be an event that would absolutely change the current landscape of the gaming industry.

How can it be said that it can reshape the rules of the financial market?

"In the past 72 hours, we have witnessed one of the most rampant short-selling attacks in Wall Street history," Ryan Ruiz continued, his tone becoming increasingly serious. "According to our data, a total of 37 institutions have sold more than 20 million shares of YueDong Games stock."

The release of this data caused a slight commotion in the room.

Many reporters were unaware of such detailed figures and quickly took notes.

"As of today's market close, according to data we obtained from Ernst Asset Management, the total amount of short selling of YueDong Games' stock and derivatives over the past two weeks has exceeded 5000 million shares, or even more."

At this point, he gestured to Pervin Houston beside him, "I forgot to introduce you, this is the new institutional shareholder of Leap Games."

Parker Houston raised his hand and nodded slightly to the audience. Ryan Ruiz continued, "In accordance with the relevant regulations of the U.S. Securities and Exchange Commission, Ernst Asset Management has officially submitted a report on changes in shareholding. As of today's closing, its holdings of YueDong Games' shares have exceeded 5% of the company's total share capital, reaching 5.12%, making it the fifth largest institutional shareholder of YueDong Games."

The announcement of this news elicited a rather muted reaction at the scene.

Whether it was Ernst Asset Management or the Garfield family's private office, their stock accumulation was already within the media's calculations.

Although some reporters were surprised, they were not shocked.

However, what Ryan Ruiz said next completely ignited the entire audience.

"What I want to say is that in the past 48 hours, we have completed in-depth communication with most of the institutional shareholders of YueDong Games. These institutions have all made it clear that they will stand firmly on the same side as YueDong Games and will not sell any of their YueDong Games shares in the current market environment."

His voice was firm and powerful: "According to our latest statistics, the shares held by the institutions and individuals participating in this lock-up will cumulatively lock up more than 88% of the total share capital of YueDong Games!"

"boom!"

This statement was like a bombshell, completely detonating in the meeting room.

A collective gasp filled the air, followed by gasps and growls, and the clicking of camera shutters rained down like a deluge, both jarring and awe-inspiring.

Everyone present understood the astonishing significance behind this number. YueDong Games has a total share capital of 1.5 million shares, and based on the 88% lock-up ratio, the number of shares locked up this time will reach 1.32 million shares.

This means that only 12% of YueDong Games' shares, or 1800 million shares, are truly available for trading on the market. It's even possible that due to factors such as long-term holding by some retail investors, the actual number of shares in circulation is less than 1800 million.

Just minutes earlier, Ryan Ruiz had announced that short sellers had sold more than 2000 million shares through margin trading in the past three days.

If the timeframe is extended to half a month, the total number of shorted stocks exceeds 5000 million shares.

In other words, the number of shares sold by short sellers has far exceeded the number of shares actually available for trading in the market.

They are conducting a massive naked short selling transaction, selling shares that do not exist.

"This is impossible!" A Reuters reporter was the first to recover from the shock, standing up and loudly questioning, "Mr. Ruiz, can you provide concrete proof of the lock-up period?"

This data is so astonishing that he must verify its authenticity before he dares to report it.

Other reporters, realizing what was happening, chimed in, plunging the scene into chaos.

As if he had anticipated this scene, Ryan Ruiz slightly raised his hand, and the giant screen behind him instantly lit up.

On the screen, a detailed list of lock-up agreements was clearly presented to everyone. The names of 14 institutions, including Boston Bank, Silicon Valley Investment Fund, and Fengyun Capital, were listed, and the number of shares held, lock-up ratio, and lock-up period for each institution were clearly marked.

"As of 4 p.m. today, all 14 holding institutions have signed formal lock-up agreements with us, with a lock-up period of 90 days, effective from today," Ryan Ruiz's voice rang out again.

Each institution's name was marked with a prominent red lock icon, like a heavy lid covering the boiling scene, instantly silencing all doubts. A deathly silence fell; everyone understood that a massive counterattack against Wall Street short sellers had officially surfaced.

Meanwhile, three thousand kilometers away in Manhattan, New York, in the heart of Wall Street, an equally violent upheaval was unfolding.

The lights were on in the CEO's office on the 42nd floor of Goldman Sachs' headquarters building.

Paulson stood at his desk, his gaze fixed intently on the television in the room, which was broadcasting the launch event for Jump Games live.

When Ryan Ruiz announced the 88% lock-up ratio, Paulson's coffee cup trembled violently, spilling scalding coffee onto the expensive handmade carpet, but he was completely unaware.

"This is impossible!" Paulson roared, his face filled with disbelief.

"Where did they get so much institutional support? How could they possibly lock up such a high percentage of shares?"

Then he whirled around and shouted at his secretary, his voice tinged with barely perceptible panic, "Quick! Check our current empty positions immediately!"

Paulson was not unaware of the risks of naked short selling in the market; he noticed the anomaly when a large-scale short-selling force suddenly emerged.

Goldman Sachs has almost lent out all of YueDong Games' shares in the hands of securities firms, but the short-selling forces in the market are still coming in continuously. Where did those short-selling institutions get the shares from?

Paulson might have believed it if only one or two institutions claimed to hold shares in YueDong Games, but it's simply impossible for dozens of institutions to hold such a large amount of stock at the same time.

As the president of Goldman Sachs and a Wall Street tycoon, he understood the ins and outs of the game perfectly well. But he was not afraid, because Goldman Sachs itself was one of the shareholders of YueDong Games. In the event of extreme market conditions, Goldman Sachs could use its own shares to liquidate its short positions. In fact, if it had a surplus of shares, it could even take the opportunity to profit from other Wall Street peers.

But the situation has completely exceeded his expectations. With 88% of the shares locked up, there are very few shares left in circulation.

Forget about profiting from its peers, even Goldman Sachs' ability to successfully liquidate its positions has become a huge question mark.

Meanwhile, the entire Wall Street was in an uproar; if you were in Manhattan, you could almost hear the piercing ringing of bells coming from every building.

In stark contrast to their panic, a completely different scene unfolded inside the Lehman Brothers headquarters building.

In Richard Fuld's office, he sat on a comfortable leather sofa, holding a glass of his treasured Bordeaux wine, leisurely watching the live broadcast of the press conference, like a detached spectator.

"This reminds me of the recent financial defense of Hong Kong," Richard Fuld said slowly, taking a sip of red wine.

Secretary Humphries, who was sitting to the side, was taken aback when he heard this. After thinking about it carefully, he realized that the two did indeed have a striking similarity.

When Soros led a short-selling force to attack Hong Kong, the Hong Kong government decisively used the Exchange Fund to absorb a large number of Hong Kong stocks, locking up a large number of circulating shares. This ultimately led to the short sellers facing a predicament of having no shares to cover their positions, forcing them to buy back the stocks at high prices to close their positions and suffer huge losses.

This joint short-selling action by YueDong Games and other institutions is essentially a corporate-led anti-short-sell defense, except that this time the target is not the government, but a game company.

"Isn't this market manipulation?" The televised press conference had already ended, without even a Q&A session. "Yuedong Games, in conjunction with 14 institutions, massively locked up shares, artificially reducing the number of shares in circulation. This clearly violates Article 10b of the Securities Exchange Law, which prohibits market manipulation!"

Richard Fuld, upon hearing this, gave a meaningful smile. "Humphries, you're still too young." He set down his wine glass and slowly said, "If they hadn't prepared beforehand, how dare they hold this press conference so blatantly?"

"As long as all participating institutions provide written statements proving that their locking-up behavior is based on voluntary principles and that there is no insider trading or transfer of benefits, it will be difficult for the SEC to find grounds to sanction them."

"But how is that possible?" Humphries still couldn't understand. "If they submitted the relevant application to the SEC in advance, with the connections and information channels of institutions like Goldman Sachs and Citigroup, it's impossible that they were completely unaware."

"You forgot, some rules don't necessarily need to be certified by the SEC," Richard Fuld reminded him with a smile.

"The Federal Court!" Humphries suddenly realized, a look of shock flashing in his eyes.

It is highly likely that Leap Games has obtained a relevant exemption through federal court, or has prepared complete legal documents in advance and filed them beforehand.

All of this bypassed the Securities and Exchange Commission in order to prevent Wall Street from knowing the news in advance.

This explains why Wall Street knew nothing about it.