He stood there in silence for about five seconds, then walked back and sat down on the sofa again.
He opened the notebook to a blank page, picked up the pen, and drew a vertical line on the paper.
"Zhao Zong, the path you proposed is technically feasible. But in practice, every step of the way will step on the SEC's sensitive points."
The tip of his pen clicked above the vertical line, "I'll tell you from the beginning."
"SoftBank holds about 4.9% of the shares, which is about 30 million shares. Based on today's market value, it is about between 40 and 5 billion US Dollar.
A large transaction of this size is called a 'block trade' on the US Stocks market - a transfer negotiated privately without taking the order book of the public Market Open market."
He paused.
"This kind of transaction is allowed by the SEC but not encouraged.
Because it bypasses the price discovery mechanism of the open market, buyers and sellers negotiate prices behind closed doors, and retail investors do not even have the right to know.
So the SEC has set up a very strict set of rules for private transfers - the core is just one, called Rule 144."
Zhao Chen's fingers stopped on the armrest.
"The logic of Rule 144 is very simple. The Nvidia stock in the hands of SoftBank is not 'Restricted Securities'.
It was bought from the public market Market Open. There is no lock-up period and in principle it can be sold freely."
Lin Shicheng's pen tip quickly drew an arrow on the paper,
"But if SoftBank does not go to the public market Market Open, but directly sells the stock to Era Vanguard,
In the eyes of the SEC, this behavior is no longer an 'ordinary sale of Secondary Market', but a 'private transfer'.
Once it is deemed a private transfer, the reporting requirements of Rule 144 will be triggered."
"What request?"
"SoftBank needs to submit Form 144 to the SEC, stating the number of shares to be transferred, the method of transfer, and the identity of the transferee."
Lin Shicheng's speaking speed slowed down,
"In other words, Era Vanguard's name has been written in the SEC's public database from the moment the transaction was completed."
Zhao Chen didn't speak, which was acceptable to him.
"This is just SoftBank. Era Vanguard, once it takes over 4.9% of the shares at once,
Adding in the 3.64% already on the account, the total shareholding ratio will jump to over 8.5% in an instant."
Lin Shicheng Write a number on the paper,
"Eighty-five percent. Only one step away from the Section 16 Insider threshold of 10%.
Moreover, since this transfer is a one-time transaction and was negotiated privately, the SEC will pay close attention to the purpose of Era Vanguard's shareholding."
He raised his head.
"I explained to you before what the five percent 13G declaration threshold is.
13G is for 'passive investors' - those who hold more than 5% of the shares but have no intention of affecting the company Control, and can be updated quarterly.
But the premise is that your holdings are accumulated 'in the course of ordinary transactions'.
If you take over nearly 5% of the shares from Major Shareholder at once, the SEC will not believe that you are just a 'passive investor'.
They will ask Era Vanguard to report 13D instead."
Zhao Chen's brows moved slightly.
"I'll tell you the difference between 13D and 13G again."
Lin Shicheng's voice lowered,
"13G only needs to report a rough one. 13D needs to report all--"
All of your related parties, all of your funding sources, all of your shareholding purposes, whether you intend to acquire or reorganize the company, and any agreements or tacit understandings between you and any other shareholders.
Each entry must be written clearly, and each entry will become a permanent record in the Wall Street public database."
He wrote four words on the paper: acquisition intention.
"Zhao Zong, if you wrote 'recognize the company's long-term value' in the 13D, but the SEC got the Form 144 from SoftBank and found that you took over the business from Major Shareholder at once--
Putting the two pieces of information together, what would the SEC's enforcement department think?
They will determine that there is some kind of 'tacit understanding' between Era Vanguard and SoftBank, which may even trigger the 'group' determination under Section 13(d).
Once recognized as a group, the shareholdings of Era Vanguard and SoftBank will be combined and calculated, which will be more than 8.5%.
It is 4.9% plus 3.64% plus the portion that SoftBank's related parties may hold—it may directly exceed 10%."
Zhao Chen tapped his fingers on the armrest three times.
"What about SoftBank? Why are they not necessarily willing?"
"There is only one reason. If SoftBank sells its shares to Era Vanguard through a private transfer, the price of this transaction will become a public record.
And if they sell in batches through the open market, the price of each transaction will be confidential."
Lin Shicheng put down his pen and said, "Masayoshi Son cleared Nvidia, with only one core purpose - to cash out.
Transferred privately to a single buyer, there is little room for price negotiation, and once the price is negotiated, SoftBank loses the opportunity to sell higher on a rebound.
For an institution of SoftBank's size, selling Market Open in batches on the public market and splitting the orders with Algorithmic Trading can achieve a weighted average price at different price points, and the final cash amount is likely to be higher than private transfers."
He closed his notebook.
"So, Zhao Zong, the path you mentioned is technically possible, but neither side is willing to take it.
SoftBank is unwilling to sacrifice the flexibility of the selling price. Era Vanguard is unwilling to show off to all Wall Street in 13D.
At the end of the road, there is loss for both sides."
Zhao Chen was silent for a few seconds.
The morning light in Manhattan outside the window has completely spread out, the mist on the Hudson River has cleared, and the river is as bright as a mirror.
"So, eating in batches from Secondary Market is the cheapest way."
Lin Shicheng nodded.
"Yes. The cost is minimal, but it requires patience. Selling Pressure of SoftBank will last about two to three weeks.
During this period, Era Vanguard opened positions in batches, split them into hundreds of small and medium-sized orders, and used Algorithmic Trading to slowly absorb them.
By the time SoftBank is cleared, our positions will almost reach the target."
Zhao Chen picked up the tea cup and took a sip.
The tea has gone cold.
"Then just follow the original plan."
Lin Shicheng turned and left.
When he reached the door, he paused and turned around.
"Zhao Zong, there is something I have always wanted to ask you."
Zhao Chen looked at him.
"What is the basis for your judgment on Nvidia?
November 16th Financial Report plummeted. You didn't panic at all. Instead, you entered the game when others were panicking.
SoftBank wants to clear its position, which means that Masayoshi Son is not optimistic about Nvidia, but it still has not swayed you."
Lin Shicheng's eyes contained a complex emotion, not questioning, "Did you see those different things?"
"What if I said, I just see a little further than most people?"
Lin Shicheng was silent for a few seconds, then nodded and didn't ask any more questions.
The door is closed.