“You really did choose an entrusted manager just like you.”
In the conference room where they were waiting for the high-ranking officials from the FSS.
Division Head Oh Taeseong, now head of the Risk Management Division, spoke in a complaining tone.
Beside him, Director Choi, now head of the overseas team, shot back.
“Chief, isn’t that obvious? You gave this guy full authority, so of course an entrusted manager exactly like him got chosen.”
“Right, it’s my fault. My fault. Team Leader Lee. Did you know their portfolio looked like this?”
“I didn’t... I only selected the firm. The investments are decided by the entrusted manager themselves.”
Chief Oh let out a sigh.
“I’m grateful that the entrusted manager is making money for us, but this isn’t the way I wanted it done. If they made money by short-selling the KOSPI, am I supposed to be happy about that or not...?”
He was currently in an extremely awkward position.
Because it had been revealed that the pension fund had provided capital to Changcheng Fund, and the investors involved were glaring furiously.
They resented Changcheng and the pension fund, which had detonated the bomb, even more than the manipulators. They believed that if Changcheng had not shorted the stocks, this kind of sharp plunge would never have happened.
“Anyway, are we sure they made money? Those five stocks—were they really manipulated?”
Director Choi stepped in.
“Chief, there’s no need to even open the lid on that. The prosecution has already identified the operators behind it and is preparing to conduct search and seizures. The key suspects have even been banned from leaving the country. They were textbook manipulated stocks.”
Stocks are truly mysterious things.
No matter how obvious a bomb may be, until it explodes, no one suspects it of being a bomb. Only after it goes off do people curse and ask why anyone bought something like that. Well, I suppose because the same mistakes repeat, the stock market will never be free of manipulators.
It was very clear stock price manipulation.
The operators had raised the stock prices bit by bit over the course of a year through multi-stage buying and matched trades. Shockingly, among the list of suspects were even some well-known actors.
Having become the front men for the operators, they drew in investors based on their public recognition, and the operators then received everything from the stock accounts, resident registration cards, seals, and financial and accredited certificates of the fish they had caught, thoroughly eliminating any possibility of betrayal.
Thanks to that, close to one trillion won in ammunition could be used as the operators’ war chest.
People truly are strange.
Isn’t this a world where even lending your bankbook to a stranger can get it used as a mule account for voice phishing? Yet how on earth could they hand over even their seals and financial certificates...? And still think those things would be used honestly...
Ordinary people would hesitate to hand over documents like that even between parents and children, but I suppose if you want to make big money, a beast’s heart is essential.
“Anyway, how are you going to respond today? Judging by the look of things, they seem to have come here to vent their anger.”
“I’m sure they have. In my twenty years of investing, this is the first time I’ve seen directors from the FSS, the FSC, and the Exchange all in one place.”
The three of us were currently waiting for the switch from the three major financial institutions.
Their influence in the securities market was greater than even the Financial Investigation Department of the prosecution, and it was obvious without hearing them what they would say today.
“Then... are you going to end it today? Team Leader Lee, as the person in charge, apologizes, and we terminate the entrusted management contract with Changcheng?”
“Are you insane? Why would we apologize?”
“...Pardon?”
“We selected an entrusted manager that makes us good money, and we even removed land mines from the KOSPI. Why should we apologize? They should be bowing to us.”
“Chief, but...”
Chief Oh patted my shoulder.
“Team Leader Lee, don’t lose heart. I only complained because it was just us here. As long as the entrusted manager keeps making money for us, that’s enough. You haven’t done a single thing wrong.”
“...Chief.”
Just as I was putting on a moved expression, the door opened and the grim reapers entered.
The three men already looked thoroughly rotten from the face alone, and the one in front extended his hand.
“Hello. I’m Director Lee Jong-su, in charge of the FSS Stock Price Surveillance Task Force.”
“Yes, it’s a pleasure to meet you. I’m Oh Taeseong, head of the Risk Team overseeing pension fund investments.”
The two shook hands without avoiding each other’s gaze.
The veins on their clasped wrists bulged as if they were about to burst.
*
“At this point, we have no intention of blaming anyone. We believe the pension fund is also a kind of victim.”
The meeting, held in a murderous atmosphere, began with words that grated on the nerves from the start.
“Of course you wouldn’t have known. To think that assets gathered through the blood and sweat of the people were used as a short-selling bomb on the KOSPI... Then who exactly was this investment for? Personally, I do feel regret that perhaps the portfolio should have been examined more thoroughly before selecting such an entrusted manager, but in any case, we believe the pension fund is also a kind of victim.”
When the FSS finished speaking, the FSC took the baton.
“Division Head. As you know, the KOSPI has been sluggish lately. In the midst of that, the Changcheng Fund incident is pouring cold water even on the last shred of trust in our stock market. How can you continue doing business with someone like this?”
Next, the baton went to the Exchange.
“There are already many concerned eyes on this matter. The point is that many individual investors feel considerable resentment toward Chinese capital disrupting the domestic stock market. Taking these overall circumstances into account, we hope the pension fund will show a sincere attitude.”
Chief Oh asked flatly.
“What kind of sincerity are you referring to?”
“Termination of the entrusted management contract. I’m sure the contract contains a clause on good faith and fair dealing. Using Korean citizens’ fund assets to drop a short-selling bomb on the KOSPI is a clear breach of good faith.”
“Well. Your side must have made quite a bit from this incident as well, so we would appreciate it if you would terminate the contract appropriately.”
“And we would also like you to make a small announcement that you will not grant entrusted management contracts to short-selling funds.”
Chief Oh fell into thought.
The people currently pressuring him were the grim reapers of the securities world. They were not people one benefited from antagonizing.
“Hmm... why?”
But the words that came out of Chief Oh’s mouth were completely unexpected.
“Pardon? What?”
“As someone who has entrusted various pension fund assets over the years, I can tell you it isn’t easy to find an entrusted manager that delivers this kind of performance.”
“I’m telling you, that entrusted manager dropped a short-selling bomb!”
“Then what, would we select an entrusted manager and ask them to do value investing? By nature, entrusted managers are selected as aggressive investment firms for futures, options, short-selling, and the like—areas the pension fund does not readily touch. Losses are commonplace as a result, yet they came back with performance like this... If it were up to me, I’d want to increase the assets entrusted to them.”
“Are you seriously saying that right now?”
The FSS official slammed the table and stood up.
“That investment performance! It’s money sucked out of the bloody tears of domestic individual investors!”
“That isn’t an area we need to consider. The pension fund is an institution that can invest even in North Korea if it is certain to rise.”
“Division Head!”
“And the essence of the problem is manipulated stocks, so why do you keep going on about Chinese capital this and that?”
Chief Oh’s voice rose.
“According to the prosecution’s interim investigation results, the funds used by the operators ranged from hundreds of billions to as much as one trillion won, and if this hadn’t been exposed now, it would have grown even larger. Then the short-selling prevented greater damage. How is that sucking blood?”
“Are you blaming us right now?”
“The nuance keeps pointing the blame at our side, so I’m saying we should make clear what is right and wrong. Of course, it isn’t desirable for an entrusted manager of the pension fund to make money through short-selling the KOSPI. But they didn’t spread false information to sow fear in the market. They simply exposed obviously manipulated stocks. What exactly did they do wrong?”
At Chief Oh’s unexpectedly firm response, the three men’s hands merely trembled.
At present, they were besieged on all sides. Following the mass limit-down incident, complaints about the stock price surveillance system were pouring in.
The only fortunate thing for them was that voices criticizing short-selling had emerged among shareholders, and it just so happened to be Chinese capital, and it also just so happened to be an entrusted manager for the pension fund, so they were asking us to share some of the whipping... but Chief Oh flatly refused.
“If anything, shouldn’t you be thanking us...?”
Bang!
When Chief Oh spoke in a sarcastic tone, their patience finally snapped.
“You people are impressive. Truly impressive.”
“...”
“But Division Head. Short-selling is not an issue that can be brushed aside so easily. When George Soros crashed the Thai baht, the aftermath led to Korea’s IMF crisis. Aggressive investment? It may earn you a few pennies in the short term, but if that leads to distrust in the Korean securities market, will it really be a gain in the long term?”
“...”
“I truly cannot understand this. The pension fund should not be defending an entrusted manager right now. You should be cooperating with our financial authorities to help build a sound market.”
Chief Oh smiled bitterly.
That’s your job... The reason the public is cursing you right now is because you failed to do your jobs... The words rose to the tip of his tongue, but it seemed better not to provoke them any further.
“I will gratefully take your advice. However, we cannot agree to terminate the entrusted management contract.”
“Hah. It seems you’ve been letting everything we said go in one ear and out the other.”
“Are you really that confident? This is an incident where Chinese capital trampled the domestic market. If public resentment grows even larger, the pension fund that supplied the ammunition won’t be able to avoid blame either.”
Chief Oh turned his head toward me.
“The person in charge of that entrusted manager is this man right here. What do you think, Team Leader Lee? Are you confident?”
Chief Oh tossed the ball to me and gave me a wink. It meant I should say what I wanted to say.
“...I’m not confident.”
And I am not the sort of person to refuse a seat like this.
“I’m not confident that we won’t short-sell again in the future.”
“W-what?”
“Director of the TF. I think the FSS will need to carry out a sweeping reform of its stock price surveillance system going forward. The types of crime have evolved. It seems the FSS surveillance program has already been cracked by the operators.”
The tricks operators used to play with junk stocks had moved up to the major stage. They raised unimaginable amounts of money through multi-stage schemes and matched trades, and in this way, even the stocks of major corporations and public enterprises became playgrounds for manipulators... yet the FSS did not even notice.
“If you do not take measures, another playground will appear, won’t it...? Then we will short-sell then, too. That is what creates a sound financial order and prevents greater victims. That is what I believe.”
When my answer ended, the three men shoved back their seats and stood.
“There’s no talking to you. Then let’s just wait and see whether the public really won’t hold the pension fund responsible!”
Watching them leave in a fit of irritation, Chief Oh muttered in a low voice.
“If investment performance is bad, they bitch that it’s bad. If performance is good, they bitch that it wasn’t earned honestly. Do they think an 800-trillion-won fund runs itself on value investing alone? Tch.”