Chapter 663
, Section 431: Stirring Up the Enemy's Mosquito
Chapter 663, Section 431: Stirring Up the Enemy's Mosquito (4K)
BaFin is actively pushing German prosecutors to initiate criminal proceedings against Yu Xing.
This matter is indeed quite troubling for Yu Xing. In addition to the impact on the stock price of Silicon Carbon Group, Baixiaosheng, which is currently listed on Nasdaq, will also face trouble. To make matters worse, BaFin's attitude is quite tough.
One minute it's market manipulation, the next it's losses for European investors, then it's threats of maximum penalties, then it's pressure through diplomatic channels—the efforts of lawyer Deng Ning and others to communicate there haven't yielded the desired results.
All of this has led to controversy surrounding the recently listed Silicon Carbon Group, which, along with Yu Xing, has also been caught up in the controversy. Bai Xiaosheng, on the other hand, is relatively better off, with stable business operations and neither Yu Xing nor Bai Xiaosheng himself serving as president or chairman.
Fortunately, Vilkard was brought to the fore by ZR's short selling.
In March, Yu Xing focused on the lawyers' communication and negotiations with Europe, and followed up on the work of the Lingang No. 2 Factory and the Ningbo New Factory. Meanwhile, Liu Wanying, who was quietly working in Shenyang, was building the seven-story Guoshanfeng, trying to find a breakthrough by filtering all kinds of information she had obtained in the past.
Not every listed company commits fraud, and not all fraud is destructive. The investigation into Toshiba, for example, did require some luck. At such junctures, the more you try to obtain effective information, the more disappointing it becomes.
Liu Wanying noticed the anonymous short seller ZR while browsing international news, which led her to further focus on its target, Vilkader. Based on her biased judgment, she then sought out the possible entanglements of interests surrounding Vilkader.
Among these factors, BaFin's overly straightforward protective actions aroused her suspicion. Further information screening and brainstorming led to more and more doubts about Vilcard, which in turn confirmed that there were also significant problems within BaFin, the German financial regulator.
The determination of Wilcard still needs to be made by Li Song, Liu Jiankai, Ren Ping and others from different directions, but it seems that it is also possible to try to bring BaFin to the negotiating table.
On April 15, Deng Ning, the lead lawyer who spearheaded the operation, connected online with Yu Xing.
He has received some information from Yu Xing regarding financial institutions manipulating the market. Last week, he communicated with BaFin and German prosecutors multiple times and received a tough response from BaFin.
Baumann, who had previously traveled to Hong Kong on behalf of BaFin and the EU investigation team, stated: "We do not accept such negotiation terms from Guoshanfeng. Yu Xing must come to Germany to accept our investigation, and Guoshanfeng must bear the losses suffered by investors due to its market manipulation."
It's impossible for Yu Xing to go to Germany. Not only does the domestic legal team think so, but Deng Ning also gives the same advice.
Dunning believes that BaFin also felt that his side would not agree to such conditions, so he responded in this way.
He then sought dialogue through personal connections, but the unofficial response from BaFin was that more specific information was needed regarding the alleged market manipulation by financial institutions.
Deng Ning himself was unaware of the situation and knew about President Yu's concerns, so he naturally could not continue negotiating on this condition.
His goal in this online meeting was to obtain more authorization, including detailed information on institutional market manipulation.
Deng Ning is a well-known lawyer, but this is Yu Xing's first time working with him. Moreover, considering that such a lawyer has a wide network of connections and may have ties with investment banks, Yu Xing is rather hesitant.
“President Yu, you should trust me,” Deng Ning said through the translator in the online conference room. “The investigation into Guoshanfeng is very intense. Some sources indicate that the Cayman Islands are inclined to hand over some suspicious information, which was traced back to the short positions of the previous investors. The isolation of offshore islands is effective in principle, but principles can be changed.”
According to the Cayman Islands’ own laws, its information should not be penetrated, but under various factors, it can still have the moral high ground of protecting legitimate interests rather than being a safe haven for illegal activities.
There is more than one principle. The Cayman Islands have principles, the European Union has principles, and China certainly has principles. Utilizing the principles of different regions to obtain protection naturally carries the risk of shifting in the game of principles.
“Dunning, come to Shanghai. Let’s talk about the market manipulation in person.” Yu Xing finally made up his mind. On the one hand, the evidence provided by Mike had been verified, and on the other hand, Wilcard showed strong suspicion of forgery and transfer of benefits.
On the screen, Deng Ning nodded, receiving permission, but his expression remained solemn.
Yu Xing added, "We still need BaFin to return to the negotiating table; we can try again."
Dunning was somewhat troubled: "I have tried my best, including with Dai Wei and Dorman. We have sought consultations and dialogues with BaFin, German prosecutors and the EU's ESMA, but BaFin is the leading body and its attitude determines the direction."
Yu Xing explained, "I mean, I'll try it from my side."
After listening to the translated words, Deng Ning thought for a moment and his expression changed. He thought that President Yu's attempt was most likely through official channels, so he said, "President Yu, please work on any other factors that can promote our negotiations as soon as possible. I can fly to Shanghai next Monday."
Yu Xing thought the timing of the meeting was acceptable, and he could try it out in the remaining days of the week... to alert the enemy.
We should try to resolve the issue from a familiar perspective.
Vilcard is the key party, BaFin is the interested party, and both are highly suspicious. The anonymous short seller ZR had already shorted the stock once last month.
The best part is that it's anonymous.
Liu Wanying was considering how to use this opportunity yesterday, and ultimately leaned towards using the media to spread rumors that the anonymous short seller ZR was being orchestrated by Guo Shanfeng.
Unlike ZR, which had no prior experience in short selling, Guoshanfeng, with its current reputation, could influence a company's stock price without even issuing a short selling report.
What ZR says, others need to study and decide how to operate; what Guoshanfeng says, others need to sell first and then study the specific situation.
Since BaFin's top management is suspected of having shared interests with Vilcard, the loss of such personal interests may actually be more likely to drive change than through public channels.
If you can't transfer benefits when you're at the forefront of a storm, then the opposite approach—that results in losses—will have the same effect.
Yu Xing and Liu Wanying reached an agreement, and news of the "over-the-mountain peak" emerged after the market closed in Frankfurt, Germany on Friday.
What BaFin needs now is to get it to sit down and talk, rather than actually harming Wilcard. The two-day weekend break is just the right time for BaFin's management to consider the situation.
Rumors can circulate, and the parties involved can directly deny them before the market opens on Monday.
This approach is both powerful and time-limited, and it will soon be clear whether things will change. If BaFin does take action, it will undoubtedly prove once again that some of its senior executives are deeply involved with Wilcard.
At 4 p.m. German time on April 16, a message first spread on Twitter and was subsequently reprinted by some media outlets.
—The anonymous short seller Zatarra Research, which shorted the German listed company Wilkerd in February of this year, was actually operated by Yu Xing, the "King of Short Sellers." Because of Guo Shanfeng's exposure last year, he chose to use a new anonymous agency name to expose the listed company's fraud.
Is there any shorting opportunity for ZR?
Have!
Is ZR as anonymous as before he crossed the mountain peak?
Yes!
What's the situation with Vilcard, this company?
He's been questioned before! Has the "King of Short Sellers" announced that he will take responsibility for the short selling incident?
He hasn't denied it yet!
In just one night, news spread like wildfire that the king of short sellers had once again targeted German-listed companies for short selling.
From last year until now, the "King of Short Sellers" has been exposed, and his official short-selling activities have stopped. The evaluations of some listed companies involved are basically from the period before the exposure, while he himself is busy promoting the listing of his companies under media scrutiny.
Now, an anonymous short-selling incident from February has resurfaced, immediately attracting the attention of numerous institutions, fellow short sellers, and media outlets both at home and abroad.
The king of short selling has already demonstrated too much skill. He previously "shorted" Steinhoff at a media conference in Hong Kong without even issuing a short selling report, and the listed company had already fallen.
Now... ZR has released a 60-page short-selling report!
The media quickly discussed what appeared to be new developments at Guoshanfeng, offering detailed analyses of Yu Xing's motives for adopting the new organization.
"This is absolutely incredible..."
When Matthew Earl, a Briton, woke up one morning, he saw discussions shared by his Twitter friends. After reading online media and analyst analyses, especially comparing the short-selling styles of ZR and Guoshanfeng, he was almost convinced that the two companies were backed by the same person.
If he hadn't personally conducted the research and released the short-selling report on Wilcard.
Earl is a professionally trained quantitative analysis expert who previously worked in investment banking and securities firms, accumulating extensive industry experience.
In particular, he gained some notoriety in the industry for publishing a bearish report on the British company Connaught PLC in 2010, which went bankrupt a year later due to financial fraud.
Earl later left the brokerage firm to work in personal investment. Last year, through acquaintances in the industry, he met another veteran short seller, Palin. The two were both paying attention to the situation of the company Wilcard, so they hit it off and combined the evidence they had. In order to avoid legal retaliation and personal threats from the company, they temporarily set up ZR.
Unfortunately, although Wilcard's stock price fell on the day it was shorted, it subsequently began to recover.
While Earl was still browsing the news, Palin called.
"Are you a mountain climber???" Perrin asked impatiently as soon as he opened his mouth.
“How could that be? How could I be?” Earl denied with a smile, then paused, “I’m not, but are you? If you are, you can just tell me directly, no need to act and lie to me.”
Palin laughed angrily: "Why would I need to act and lie to you?"
Earl points out: "Even your boss who's always been acting, so what's impossible about you acting?"
The career of short seller Yu Xing has been thoroughly exposed. On the one hand, he has been deeply involved in the automotive industry, and on the other hand, he has shorted his peers. He has also made public comments on short selling, all of which have become topics of conversation.
The two short sellers who were truly in control of ZR spent half an hour doubting, testing, and cursing each other's promises before finally convincing each other that the other was not a member of the Over Peak group.
Earl, reflecting on his confrontation with Perrin, said with a wry smile, "If Yu Xing comes forward and admits he's ZR, then no one will believe we're the real ZR..."
Perrin also found it strange, but said, "He wouldn't, he has no need to. But I don't know how this news is spreading. Well, it's a good thing. If we can use the attention from the mountain peak to kill Wilcard, that would be a good thing too."
Despite the recovery in Wilcard's stock price, the two did not actually gain much from short selling and still hold some positions.
"If Yu Xing doesn't deny it, that would be great. As long as Monday comes and the market opens, Wilcard's stock price will definitely fall!" Earl said hopefully.
Palin felt the same way.
As industry peers, no one understands better than them the power of the short-selling king to influence the market, not to mention that Vilcard himself has serious problems.
Even without the King of Short Sellers admitting it, the longer he remains silent, the greater the chance of Vilcard being exposed will be.
Earl ended his call with Palin and continued browsing media and online discussions.
He watched for a while, wishing he could fly to China immediately and join Guo Shanfeng on the spot, so that... Guo Shanfeng would truly be behind ZR.
As Earl thought about it, an idea suddenly popped into his head: perhaps he could consider going to the mountain peak to take a look.
The two people who actually shorted Vilcard knew the destructive power of the "King of Short Sellers." Vilcard's president, Marcus, felt the pressure even more. In fact, he secretly asked someone to investigate the true identity of the anonymous short seller when he was shorted just two months ago, but there are still no results.
However, if there are mountains behind you, then there's no need to check, and you can even save some living expenses.
Marcus urgently called BaFin's president, Hufeld, to discuss the unexpected situation.
The two were still hanging out at a banquet the day before yesterday, so there was no need for formalities this time; they went straight to making clear requests.
Hufferd frowned as he listened to the voice on the phone, asking doubtfully, "Could it be over the mountain peak?"
“This happened in February, and it’s all over now. Whether or not it was a mountain peak…” Marcus said in a deep voice, “it doesn’t have to be a mountain peak.”
Hufferd paused for a moment, then said, "I understand."
He himself holds shares in Wilcard and also receives various forms of financial support from them. In the last short-selling operation, he even had his close associates in BaFin buy shares before the positive news, profiting from the stock price rebound.
Regardless of whether ZR is true or not, there's no need to go over the mountain peak.
On Sunday afternoon, Deng Ning, a senior lawyer who was about to depart for Shanghai, was surprised to receive a call from Le Gele, the vice president of BaFin. The caller changed his previous tough tone and claimed that he was considering more substantive negotiations regarding Yu Xing's lawsuit.
They're willing to talk? What's going on?
Deng Ning was taken aback. He knew that President Yu had been trying, but he didn't expect the results to be so quick.
For a moment, he didn't know whether President Yu was too fair-skinned or too dark-skinned...
(End of this chapter)