What's wrong with me being a rich man?

Chapter 466 Scarecrow

The market has two days to verify the veracity of Renault's emissions fraud.

The market did not disappoint these past two days, responding to the report that had passed the peak with a sharp drop.

As for Ghosn, the prisoner, he was an unexpected twist in this short-selling incident.

However, as one of the most mysterious and influential short sellers in the world, the French AMF immediately established a temporary investigation team after its attack on Renault, hoping to make full use of the next two days to prevent this disaster from happening.

Carlos was the deputy leader of this temporary team. He was experienced and had volunteered to investigate the mountain peak.

On the afternoon of May 2, within six hours of the opening of the Over Peak Station, he and his colleagues planned the direction of this operation and decided to cooperate with regulatory agencies in multiple countries to do their best to capture Over Peak.

Carlos was driven by a strong urge to prevent the disaster from happening.

His car was a Renault, his brother-in-law worked at Renault, and, most importantly... he took his brother-in-law's advice and invested most of his money in Renault stock...

Logically, after joining forces with Mitsubishi Motors, the Renault-Nissan Alliance should continue to promote synergy in technology and supply. As Chairman Ghosn anticipates, his goal for the next three years is to be the best globally, and the long-term stock price trend should be quite good.

Carlos trusted his brother-in-law, and also trusted Ghosn, who was hailed as the most outstanding automotive CEO of the past two decades. After all, he had led the Renault-Nissan Alliance to break the long-term monopoly of the three giants, GM, Toyota, and Volkswagen, on the sales champion.

However, the short-selling report by Guoshanfeng was a devastating blow.

At 8 p.m. on May 2, the AMF investigation team, through the market monitoring system, had already screened out several sets of transaction data suspected to be from the target. The characteristics of these data were that multiple related accounts established large-scale short positions through derivatives without reporting them to the regulatory system, and the flow of funds was a typical chain through French accounts and Luxembourg shell companies.

However, "unreported" and "large-scale" were only used as screening criteria. These accounts themselves did not meet the reporting threshold but were very close. Multiple suspected operations provided the pretext for launching an "emergency investigation into market manipulation".

At 9 p.m., Carlos reported to the AMF office through the emergency investigation procedure. After obtaining authorization, he retrieved further transaction records and began to apply for international cooperation. Two hours later, he sent urgent letters to institutions such as BNP Paribas and European Union Bank, requesting clues including the establishment of short positions and SWIFT message records.

As the night drew to a close, the process, which normally takes 48 hours, was successfully shortened, leading to a preliminary confirmation that two groups of funds flowed from offshore accounts in the British Virgin Islands (BVI) to Pictet Bank, a private bank in Switzerland, under the name Straw Man, whose actual controller could not be identified.

The straw man has always been used as a shield to conceal where funds ultimately end up.

Swiss private banks have always been a favorite transit point for mysterious funds.

“Carlos, we can send urgent cooperation requests to BaFin in Germany and the FCA in the UK tomorrow. It’s unlikely that the people in Switzerland will agree to cooperate, but we can also contact the Luxembourg financial regulator to request that the shell company’s accounts be frozen.” Dani’s eyes were already bloodshot. When she saw the flow of funds, she felt that this operation would be difficult to be fully effective, so she could only offer advice while drinking coffee.

Carlos frowned: "The process in Luxembourg will likely take two days! There are definitely people in Europe behind the mountain peak. The latest news from BNP Paribas is that their funds are not fully utilizing SWIFT messages, and there are loopholes in the internal transfers between the head office and branches!"

Dani nodded and said about the current situation: "I think it will be difficult to stop the short selling by Guoshanfeng this time. It seems that Renault does have problems, and its capital chain is also very sophisticated. The banking secrecy laws of Switzerland and Luxembourg have always been a difficult point for us to overcome."

Seeing that Carlos didn't speak, she continued, "But the funding chain that has surfaced this time is traceable. Switzerland is going to sign the Declaration on Automatic Exchange of Tax Information this month. It must implement the Common Reporting Standard (CRS), and that set of bank secrets will definitely have to change."

The agreement Switzerland is about to sign would require Swiss banks to automatically exchange information on the financial accounts of non-resident users with tax authorities in other countries, including the identities of beneficial owners, representing a major shift in the Swiss financial system.

In other words, even if we don't catch the mountain peak this time, more information will emerge as Swiss regulations change further.

Dani is optimistic about this, as it is a trend that not only France and Europe, but also the United States and other countries will jointly promote. Switzerland signed the FATCA agreement with the United States last year, which will require banks to notify the U.S. Internal Revenue Service of the account information of U.S. customers. Such international cooperation will inevitably force Swiss domestic laws to change.

Carlos sighed deeply: "Three years? Five years? Guoshanfeng is so cunning, who knows where the funds will go by then."

Dani cautioned, "These accounts cannot yet be proven to be related to Guoshanfeng. I highly doubt that the people manipulating the shell companies are aware of whether Guoshanfeng is behind them. So far, we are only speculating and detecting coordinated transactions of related accounts. We still need reasonable evidence of criminal activity."

Carlos was silent for a moment, then answered two urgent phone calls before finally saying, "We may not be able to stop the short selling of the mountain peak, but we must make it feel the pain."

From France to Luxembourg to the British Virgin Islands, in addition to the issues of their respective regulations, the time involved in this route is also a natural obstacle. With only a day and a half left, if the short seller successfully shorts Renault after overcoming the peak and then withdraws in time, the funds could disappear along the chain in the blink of an eye and eventually be digested in different regions around the world.

Carlos was conflicted. He wanted to be more greedy when crossing the mountain to allow more time, but he also felt that if he became greedy, it would mean that Renault would be in serious trouble.

He stayed up all night to continue investigating the suspected target and considering how to cut off the flow of funds within the framework, but the next day, news of Ghosn's arrest emerged, which was undoubtedly another major negative news for Renault.

Carlos was on the verge of tears, but could only continue pushing forward with the investigation.

As the opening date approached, Carlos and his colleagues led separate teams to Luxembourg and Switzerland, where the suspected shell company was located.

At 8:5 a.m. on May 4, just one hour before the market opened, Carlos and staff from the Luxembourg Financial Authority raided the shell company's registered address, intending to cut off the flow of funds there.

However, unexpectedly, besides the analyst who resigned from the brokerage firm, there was also a lawyer smoking in the small office.

Carlos revealed his identity, only to be met with disdain from lawyer Mick.

“Mr. Carlos from Paris, I do not believe you have the right to suspend my client’s rights under the Code of Criminal Procedure, the European Convention on Mutual Legal Assistance in Criminal Matters, or the General Data Protection Regulation,” Mick said with a smile. “In fact, you need a more formal assistance procedure from the Financial Conduct Authority, otherwise such an entry investigation is also non-compliant.”

Carlos was pressed for time, and there was indeed a slight irregularity in his actions, but he didn't expect that there would be a professional lawyer present when he brought his people here.

Without a doubt, this was the operation orchestrated behind the scenes by Guoshanfeng.

He glared at the lawyer and the analyst still looking at his computer, suppressing his anger as he said, "You and the German company are working together, violating French position reporting regulations! You are shorting Renault, you are aiding and abetting Mount Everest's wrongdoing!"

Mick calmly stated, "I don't know what the basis is for your accusation about the mountain peak. I was merely providing legal services to the client. And what does the French position declaration have to do with Luxembourg? How can the German company's account prove to be a diversified transaction with the same party? If there are any doubts about the French AMF, all investigations should be conducted in accordance with laws and regulations."

Carlos wondered if his colleagues were facing similar situations. He felt this might be an opportunity to get closer to Guoshanfeng Information, and looked directly at the analyst Carter in front of the computer, questioning, "Carter, are you working for Guoshanfeng? Do you know how much your actions will cause losses for investors?"

“No, I work for Luxembourg Construction Investment Company,” Carter denied, mentioning the company’s name. He paused, then added, “But if it really is behind the mountain peaks, I would be honored.”

Thinking of the funds in his account that were about to be destroyed, Carlos roared, "You...you're despicable!"

At this point, lawyer Mick stepped forward and said bluntly, "Since Mr. Carlos is from AMF France, I believe your primary task should not be to harass my client in an irregular manner. What you should be doing is arresting the fraudulent Renault executives! I think Ghosn is the most despicable one!"

After saying this, he suddenly feigned realization: "Oh, Ghosn has already been arrested, and the AMF can't catch him, right?"

Carlos glared at the lawyer in front of him.

Mick remained unmoved.

At this moment, Michel, who had accompanied Carlos from the Luxembourg Financial Supervisory Authority, patted him on the shoulder: "Let's go to the agency to apply."

The financial regulatory authority needs to initiate an investigation and collect evidence, and then notify the company to make a decision based on the results. Under the current circumstances, the normal process usually takes several weeks or even months. Even with expedited processing, the entire process may take four or five hours. The best outcome would be to issue a written freeze order to the bank where the Luxembourg construction investment company has its account.

Even so, the company can file an appeal. If there are problems with the previous procedures, then they will only be asking for trouble.

Mitchell was willing to help his French friend, but with a lawyer present, he couldn't overstep his authority; otherwise, he would be the one in trouble.

Carlos knew this, and could only look at the two people in front of him with resentment before turning around and leaving to apply for an emergency.

“Carlos, you must direct your anger towards large corporations like Renault, not those small-time exposés!” Lawyer Mick shouted at the retreating figure. “We can’t tolerate Renault just because it’s a French company! We can’t let Renault continue to do evil!”

His calls naturally went unanswered.

Carter, the analyst who was still sitting, glanced to the side and laughed, "AMF has come knocking on our door like this, it seems that the company really has a powerful backer."

Mick was in a good mood: "Whether it is or not, my money is going to increase along with it."

He didn't just start providing legal services to the Luxembourg Construction Investment Company today; during his conversations with Carter, he felt that there was profit to be made from shorting Renault, so he tried investing some money.

Today is not only the time to reap the rewards of crossing the mountain, but also the time for him to enjoy the soup.

Sure enough, Renault's stock price plummeted not long after. Before Renault's stock price hit rock bottom, Luxembourg Construction Investment Company, at the request of the Swiss side, secured its profits.

Carter carried out the operation, but felt it was a great pity, as Renault could clearly have brought in more profit.

“Safety, everything is for safety.” Lawyer Mick understood perfectly.

Carter could only suppress his greed and easily complete the puppet-like operation, watching Renault's stock price continue to fall with a detached attitude, humming a little tune: "I am a scarecrow, I am a scarecrow."

……

"How about it?"

Yu Xing witnessed Renault's stock price plummet along with short-seller Xu Xin. After seeing off Mr. Xu, who seemed to have little talent in this area, he called Liu Wanying in Hong Kong to inquire about the day's situation.

“There’s a minor problem; some accounts have been frozen.” Liu Wanying’s tone remained calm. “But it’s not a big deal; they might be able to be unfrozen later. However, whether they are unfrozen or not is irrelevant.”

Yu Xing asked cautiously, "Will it interfere with the next time?"

Liu Wanying gave the answer: "No, unless they come out on their own."

Whether it's regulatory agencies or the media, some of their attention is focused on the mountain peaks, while more is on the power struggles within the auto alliances. It's impossible for them to pay attention to Volkswagen's situation at this time.

Moreover, perhaps due to Ghosn's self-disclosure, or perhaps due to the operations of other companies that were also falsifying emissions data, the media did not focus on the detail of "diesel vehicles".

Unless the public makes sacrifices themselves, it's unlikely to trigger a regulatory investigation like this one.

Furthermore, because of this short-selling attack on Renault, similar short-selling reports will naturally be more persuasive in the future, and the market will not be given two days to react; they will only be more sudden and turbulent.

Yu Xing asked a question he had asked before: "What do you think of Volkswagen?"

Liu Wanying replied, "Still the same."

The crowd was quiet.

However, as a CEO who was trembling with fear, Martin, after witnessing Renault's stock price plummet, pondered for a long time and decided to hedge, planning to take out a sum of money to short Volkswagen.

If the mountain peak doesn't come, that's naturally a good thing.

If you come all the way over the mountain peak... it won't have been a wasted trip.

(End of this chapter)