Chapter 653
421 Self-Preservation
Chapter 653 421 Self-Preservation
Yu Xing was well-prepared for the silver manipulation case. After his identity was exposed, he specially selected and recruited legal professionals to enter the conference room and provide legal assistance to the "tainted witness" who had come from afar.
Li Song remained silent throughout, but after leaving the room, he immediately asked President Yu with a hint of resentment, "President Yu, why didn't we short those investment banks? They have no sense of honor; let's just go and beat them up!"
Yu Xing dispelled Li Song's impulse with a single sentence, calmly saying, "I've studied it; the benefits aren't significant."
Li Song was immediately convinced without the slightest doubt. If the King of Short Sellers said that the profits from short selling were not great, then the profits must be small.
Yu Xing put it succinctly: "Mike's concerns are valid. Regulatory fines are often treated as operating costs for investment banks. The penalty process is too long and there is no expectation of such penalties."
For firms like Morgan Stanley and Deutsche Bank, some fines, though unexpected, are understandable. That's just how they are; they'll impose fines if they want. These aren't fines; they're just the "costs" that should be paid in pursuit of profit.
At the same time, the lengthy investigation and conviction process is enough for investment banks to manage their expectations for stock prices, making it difficult to shake the price trend. Also, Mike's reason for seeking help outside the system and his fear of being pushed out to take the blame is that such things have happened in the past.
In particular, the Libor case, in which the London Interbank Offered Rate (LIBOR) was just convicted last year, saw Tom Hayes, a Citibank trader, receive the longest sentence of 14 years in prison.
Apart from him, the more than 20 people sentenced were all traders, quote clerks, and middle managers. The senior executives of the bank involved only resigned and were fined, without any criminal convictions.
Tom tried to speak out, claiming that UBS was using him as a scapegoat, but his voice made no impact whatsoever.
Others might just watch this case with amusement, but Mike, a fellow trader, felt a chill run down his spine.
In the Libor case, all the banks sacrificed pawns to save the king during the investigation. They proactively provided evidence of traders' personal communications, emphasizing that it was individual behavior and shifting all responsibility to lower-level employees, as if the traders were spontaneously and desperately trying to help the bank earn hundreds of millions of dollars.
Mike previously moved from Morgan Stanley to Deutsche Bank, where he had a bad relationship with his superiors. He continued to work in the same field here, but there have been regulatory investigations in the past two years, and the potential dangers are making him very uneasy.
If a serious crime is to be committed, rather than becoming a scapegoat for investment banks, it's better to leverage the value of the evidence you have, which can also secure your future.
Mike didn't want to end up homeless after his release from prison, so he figured he might as well kill himself now. However, he still had a wife, children, and family.
Investment banks won't genuinely help you; instead, they'll seek the lowest-cost solution. Regulatory agencies may not heed an individual's plea for acquittal. Once you work with them, there's no going back. Legal support from top lawyers comes at a hefty price…
Mike chose the short-selling king from the East, who was rich, troublesome, and seemingly had a good reputation.
That night, Li Song was so excited about obtaining some evidence of investment banks manipulating silver prices that he didn't sleep well. He wanted to share his feelings with Xu Xin but could only keep it a secret.
The next day, he said to President Yu with emotion, "President Yu, I barely slept last night and couldn't find anyone to talk to. Your secret to being able to hold your breath for so long while climbing mountains is truly remarkable; it takes real resilience!"
Yu Xing did not accept the flattery: "You can't find anyone to talk to, oh, you can't talk to President Xu, right? I'm different from you, I can find people to talk to."
Li Song: "..."
“If Mike makes any further requests, you’ll be in charge of liaising with him.” Yu Xing took a sip of coffee, seemingly lost in thought. “They were also working through the night to study Mike’s situation, saying that the investment bank’s lawyers wouldn’t protect him, they would only protect the investment bank. There was a similar case last year, where someone blindly cooperated with regulatory agencies and ended up with a severe sentence.”
He handed over a set of updated materials, not intended for Mike, the client, but rather the legal team's perspective on the matter, citing the Libor case from last year's conviction. Hayes, who had been heavily fined, chose to cooperate with regulators, but he made a mistake by handing over evidence without signing any waivers or cooperation agreements. Meanwhile, the banks, with their Deferred Prosecution Agreements (DPAs), gained the upper hand.
The deferred prosecution agreement is only given to institutions, not individual traders. Investment banks admit the facts, pay huge fines, rectify compliance issues, and cooperate in arresting people in exchange for temporary waiver of prosecution. Senior executives will not be criminally convicted, and they will be observed for about three years. If they do not re-offend, the case can be dropped.
Ultimately, the evidence Hayes handed over became irrefutable proof of his guilt. He thought he was a tainted witness, but legally he became the principal offender who surrendered himself.
After reading the materials, Li Song had only one thought: "This thing... is also very dangerous."
Traders like Mike and Hayes are simply skilled in a particular area; when faced with legal proceedings, they are no different from ordinary people.
“The evidence we have now still needs to be analyzed for authenticity. Mike didn’t get his money for nothing. You can see if there are any follow-up requests here,” Yu Xing said. “It’s more convenient here in Hong Kong; we’ll set up a special team.”
Li Song had no objections, but when he mentioned his own request, he said somewhat awkwardly, "President Yu, the coordination is fine, it's just... well..."
Yu Xing asked, "What do you want to say? Just say it."
Li Song said, "Then I guess I'm considered a member of our Over the Peak team."
"Overcoming obstacles is just a formality, just like the information summary about Baidu on the forum this time," Yu Xing laughed. "Once the obstacles are exposed, they're everywhere. Information gathering, related transactions, and distinguishing truth from falsehood—that's just a formality. Don't be too rigid about it."
Li Song felt that official status was very important and insisted, "Then I should at least have an employee badge."
Yu Xing agreed to this: "No problem."
In that instant, Li Song suddenly felt a surge of pride, realizing that President Yu had previously looked down on him!
He became a member through his own hard work, continuous learning, fearless dedication, and his wife's influence.
You used to call me a short seller, and I didn't say anything, but you still had to issue me an employee badge later.
Li Song felt smug and became even more determined to handle the matter carefully.
However, the research of evidence also requires the cooperation of professionals. While he was waiting for the conclusion in Hong Kong, the listing date of the Silicon Carbon Group was set for March 13th, when it would officially list on the Hong Kong Stock Exchange's GEM board.
Li Song immediately wanted to share the news with Xu Xin, but then he saw another message popping up from the mainland.
Reports suggest that companies like Tencent, Silicon Carbon, and Meituan are planning to invest in and partner with Pinduoduo, optimistic about its long-term development in the e-commerce sector and hoping to use it to counter Alibaba.
"The news was indeed leaked. Wait, why did I say 'as expected'?"
Upon hearing the situation while on the phone, Li Song instinctively made a judgment.
(End of this chapter)