Recaps

Su Wantang persuaded Zhao Chen to visit Zhao Jianguo in the detention center and publicly show that he was seeking answers about his newly revealed siblings. Zhao Chen and his team planned to use the visit and the brokerages’ liquidation deadline to make Zhao Jianguo see that Lin Wanqing could not save his pledged shares, leaving him to accept Zhao Zong’s takeover.

• Su Wantang told Zhao Chen to visit Zhao Jianguo so the public would see him react like someone newly learning about his half-siblings.
• Su Wantang explained that Zhao Chen should tell Zhao Jianguo how Lin Wanqing’s actions had worsened his share crisis and left his pledged shares facing liquidation.
• Chen Xi predicted Zhao Jianguo would call Lin Wanqing for help and proposed that the brokerages confront him with the liquidation deadline.
• Zhao Chen agreed that Zhao Jianguo needed to see Lin Wanqing would not rescue his equity before he would give up hope.
• Chen Xi said the brokerages should make clear that shares would enter liquidation if the price fell below 5.5 yuan when the market opened Monday, and press Lin Wanqing for specific answers during the call.

Zhao Chen faced reporters’ questions about Zhao Jianguo, Lin Wanqing, and the company audit, then went to the detention center to confront his father about Lin Wanqing and their alleged three children. Zhao Jianguo appeared shocked when Zhao Chen revealed what he knew, and the chapter ended before he explained how Zhao Chen learned it.

• Zhao Chen told reporters that he had no connection to Zhao Jianguo’s imprisonment and said Henglong had to sever related-party transactions with Lin Wanqing’s suppliers.
• Zhao Chen said he did not believe Zhao Jianguo had betrayed his mother and announced that he would ask his father directly.
• Reporters publicized Zhao Chen’s remarks and tracked his trip to the detention center.
• Zhao Chen confronted Zhao Jianguo about his relationship with Lin Wanqing and their alleged three children.
• Zhao Jianguo asked how Zhao Chen knew, and Zhao Chen challenged him for assuming he had hired a private detective.

After visiting Zhao Jianguo, Zhao Chen left the detention center in shock, and public opinion began to turn in his favor. Meanwhile, Fang Wentao warned Zhao Jianguo that Hengling’s stock could breach his liquidation line by Monday, but Zhao Jianguo asked him to delay the risk-control action while he raised funds.

• Zhao Chen left the detention center without answering reporters, and his silence prompted speculation that he had only just learned of his father’s betrayal.
• Old K analyzed photos of Zhao Chen and argued that his expression suggested he had not known about the illegitimate children beforehand.
• Online opinion shifted toward sympathy for Zhao Chen and skepticism toward claims that he had planned to seize Zhao Jianguo’s assets.
• Fang Wentao visited Zhao Jianguo and warned that Hengling’s stock price could fall below Zhao Jianguo’s 5.5-yuan liquidation line when the market opened Monday.
• Zhao Jianguo asked Fang Wentao to persuade the Risk Control Committee to give him two more days to raise funds.

Zhao Jianguo learned that Lin Wanqing would not save his pledged shares and faced the prospect of their forced liquidation. Fang Wentao offered Zhao Chen’s discounted buyout, but Zhao Jianguo tried to negotiate a higher price.

• Fang Wentao promised Zhao Jianguo an answer within two hours, while Zhao Jianguo hesitated to call Lin Wanqing.
• Zhao Jianguo called Lin Wanqing, who blamed Zhao Chen for forcing her into the crisis and said she would rebuild her business after his shares were liquidated.
• Fang Wentao told Zhao Jianguo that Zhao Chen was willing to take over the shares and associated debt for 50 million Hong Kong dollars in cash.
• Zhao Jianguo rejected the offer as too low and asked Fang Wentao to negotiate for 200 million, bundling all his shares and repayment obligations.
• Fang Wentao said he would try to argue for Zhao Jianguo but warned him to prepare for the possibility that the negotiation would fail.

Zhang Qingxue met Zhao Jianguo at the detention center to negotiate Zhao Chen’s purchase of his Henglong Group shares. Zhao Jianguo rejected a proposed share pledge as a performance guarantee, leaving the deal stalled.

• Zhao Chen waited in his Bentley outside the detention center as Zhang Qingxue arrived to meet Zhao Jianguo.
• Zhang Qingxue and Li Weize joined Zhao Jianguo and Fang Wentao in the meeting room to discuss the share transfer.
• Zhang Qingxue proposed that Zhao Jianguo transfer his 170 million Henglong Group shares to Zhao Chen’s designee for 100 million Hong Kong Dollars within thirty working days.
• Zhang Qingxue added that Zhao Jianguo pledge 10 million new Henglong shares as a performance guarantee, warning that they faced forced liquidation.
• Li Weize said the guarantee was not excessive, but Zhao Jianguo refused to sign, and Zhang Qingxue began packing up the documents.
• Fang Wentao urged Zhang Qingxue not to stall the transaction over the guarantee.

Zhao Chen told Zhao Jianguo that he had known about his and Lin Wanqing’s misconduct for years and had prepared to bring them down. He offered Zhao Jianguo one hundred million for retirement, but warned that he would leave him with nothing if he gave it to Lin Wanqing; Zhao Chen then returned to the glass partition.

• Zhao Chen sent Zhang Qingxue, Fang Wentao, and Li Weize out of the meeting room, leaving him alone with Zhao Jianguo.
• Zhao Chen revealed that he had been preparing against Zhao Jianguo long before Zhao Jianguo got into trouble.
• Zhao Chen said he had long known about Zhao Jianguo’s three children with Lin Wanqing and the money she siphoned from Henglong to support them.
• Zhao Chen offered Zhao Jianguo one hundred million for retirement and warned him not to give it to Lin Wanqing.
• Zhao Chen started to leave, stopped, and returned to the glass partition.

Zhao Chen returned to Henglong after securing Zhao Jianguo’s signed share-transfer agreement, leaving him with control of more than 76% of the shareholders’ meeting. He showed the agreement to Liu Mingyu, who realized the source of Henglong’s uncertainty had been removed.

• Zhao Chen, Su Wantang, Chen Xi, and Zhang Qingxue returned to the Chairman’s Office at Henglong.
• Zhao Chen told Su Wantang that everything had gone smoothly, then asked Chen Xi to bring Liu Mingyu to him.
• Liu Mingyu went to Zhao Chen’s office after Chen Xi summoned him.
• Zhang Qingxue showed Liu Mingyu the signed agreement transferring Zhao Jianguo’s 170 million Henglong shares to an entity designated by Zhao Chen.
• Zhang Qingxue explained that Zhao Chen’s personal stake would exceed 66% and his actual control at the shareholders’ meeting would exceed 76%.

Zhao Chen convened Henglong's board as the company faced fallout from Lin Wanqing's interview and Zhao Jianguo's upcoming verdict. The meeting began with Song Zhongping challenging Lin Wanqing over her public statements, and she defended them as the truth.

• Liu Mingyu prepared for the board meeting while wondering what Zhang Qingxue meant by saying Henglong would have only one voice.
• Zhao Chen arrived and began the meeting without providing an agenda or documents.
• Liu Mingyu introduced the discussion of Lin Wanqing's interview and the expected impact of Zhao Jianguo's verdict.
• Song Zhongping asked Lin Wanqing whether she had consulted the board before discussing her relationship with Zhao Jianguo on national television.
• Lin Wanqing said she had spoken the truth, claimed she and Zhao Jianguo had been together for over a decade and had three children, and offered to have the children take paternity tests.

At Henglong’s final board meeting, Lin Wanqing refused to take responsibility for the company’s troubles, insisting she would leave and build a rival business. When Sun Zhengping warned that forced liquidation of Zhao Jianguo’s 30% stake could devastate Henglong’s stock price, Lin Wanqing dismissed the consequences and challenged Zhao Chen, who then called on Aunt Zhang to speak.

• Lin Wanqing told Wu Hongyang that Zhao Jianguo’s pledged shares and Henglong’s future were no longer her concern because she planned to leave the company.
• Lin Wanqing accused Zhao Chen and Henglong’s executives of driving her into a corner and said she had nothing left to lose.
• Sun Zhengping warned that liquidating Zhao Jianguo’s 30% stake could flood the market with shares and sharply depress Henglong’s stock price.
• Lin Wanqing dismissed the warning, argued Zhao Chen had left her no way out, and challenged him to respond.
• Zhao Chen set down his glass and told Aunt Zhang to explain.

Liu Mingyu broke with Lin Wanqing by proposing her removal as Henglong’s Finance Director, and the board voted to remove her. He then proposed suspending four of her trusted aides for a special audit, leaving Lin stunned as the meeting continued.

• Liu Mingyu proposed removing Lin Wanqing as Finance Director and cited unauthorized media statements, suspicious transactions with Henglong, and misconduct in investment and finance.
• Lin Wanqing accused Liu Mingyu of betraying her, but he said his duty was to the company.
• Song Zhongping, Sun Zhengping, Wu Hongyuan, and Li Weimin voted to remove Lin Wanqing, with only Lin opposing the motion.
• Liu Mingyu proposed suspending Zhang Tao, Wang Lei, Wang Zhenyu, and Wang Bin and subjecting them to a special audit.

Henglong Group issued sixteen announcements that formalized Zhao Chen’s takeover, Lin Wanqing’s removal, and a sweeping audit and management shake-up. As online discussion celebrated his rapid rise to control, Zhao Chen quietly told Shen Zhiyi he was fine.

• Henglong announced that Zhao Jianguo had agreed to transfer 170 million shares to Zhao Chen for HK$100 million, and scheduled a special shareholders meeting for June 23 to consider the deal and a Whitewash Waiver.
• Henglong announced that Lin Wanqing had left as Finance Director and disclosed preliminary audit findings involving transactions with her affiliated companies.
• Henglong suspended Zhang Tao, Wang Lei, Wang Zhenyu, and Wang Bin for special audits, appointed Chen Qiming as Finance Director, and released further announcements on audits, compliance, and business plans.
• Su Wantang brought tea to Zhao Chen, who read Shen Zhiyi’s messages and replied that he was fine.
• Snowball users discussed the announcements, Zhao Chen’s growing control of Henglong, and the company’s governance changes.

As Zhao Chen prepared for Henglong’s next steps, he went to court to witness Zhao Jianguo’s sentencing. He sat near Lin Wanqing as Zhao Jianguo entered the defendant’s dock, and their complicated past remained unresolved.

• Zhao Chen told Chen Xi that Henglong’s stock would not suffer a major drop and instructed her to watch the market when it opened.
• Zhao Chen told Su Wantang he would attend Zhao Jianguo’s trial, while recalling his own past in the defendant’s dock.
• Zhao Chen and Zhang Qingxue arrived at the courthouse and ignored reporters’ questions.
• Zhao Chen saw Lin Wanqing in the gallery, where she watched him with undisguised hatred.
• Zhao Jianguo entered the courtroom in prison clothes, briefly met Zhao Chen’s gaze, then looked away.
• Zhao Jianguo and Lin Wanqing exchanged a complicated look as the judge entered.

Zhao Chen learned that short sellers had driven the share price sharply down while he was at the courthouse, forcing him to rush back to the company and confront his own arrogance. Zhang Qingxue began telling him what she admired most about him, but the chapter ended before she explained.

• Chen Xi told Zhao Chen that heavy selling had pushed the share price as low as 5.88.
• Zhao Chen ordered Chen Xi to complete supplementary pledge procedures, prepare an announcement, and ready funds without using them until he arrived.
• Zhao Chen left the courthouse with Zhang Qingxue and ordered the driver to return to the company quickly.
• Zhao Chen admitted to Zhang Qingxue that he had grown arrogant and credited luck and his knowledge of future events for much of his recent success.
• Zhang Qingxue told Zhao Chen that she admired something about him beyond his precise vision and ruthless actions.

Zhao Chen heard Chen Xi and Zhang Qingxue’s plans to support Henglong’s falling share price, while learning that Lin Wanqing’s trust account had sent money to an account linked to a shorting institution. The group settled on shareholder or executive purchases as the lawful option, but Zhang Qingxue stopped them to ask where the funding would come from.

• Chen Xi reported that Henglong’s stock had fallen to 5.95 and that Lin Wanqing had transferred 30 million Hong Kong Dollars through an offshore channel to an account linked to a shorting institution.
• Zhang Qingxue and Chen Xi discussed ways to support Henglong’s share price, and Zhang Qingxue rejected secretly buying shares through unrelated accounts as too risky.
• Chen Xi proposed having Su Wantang and Ms. Shen increase their holdings because Zhao Chen’s pending share transfer made it risky for him to buy shares himself.
• Chen Xi estimated they needed at least 20 million shares, costing about 120 million Hong Kong Dollars, and Zhang Qingxue asked Zhao Chen to clarify the money’s source.

Zhao Chen rallied Henglong’s executives and Shen Zhiyi to buy shares and help stabilize the company’s stock price. As the afternoon market opened, Shen Zhiyi followed Chen Xi’s instructions and began buying Henglong shares.

• Zhao Chen offered Chen Xi, Zhang Qingxue, Song Zhongping, and Chen Qiming interest-free loans to buy Henglong shares, with profits theirs and losses his, provided they held the shares for six months.
• Chen Xi, Zhang Qingxue, Song Zhongping, and Chen Qiming agreed to buy shares, and Zhao Chen arranged purchases for them and a one-million-share allowance for Secretary Liu.
• Zhao Chen called Shen Zhiyi and asked her to buy Henglong shares with funds he provided, and she agreed without asking for details.
• Shen Zhiyi told Zhou Xiaowen she was going out to help Zhao Chen and asked her to say she had gone to the Library.
• After the market opened, Shen Zhiyi sat in a cafe near the school and bought Henglong shares as instructed by Chen Xi.

Zhao Chen and his allies defended Henglong’s stock against a short-selling attack, breaking through the first lines of sell orders before luring the shorts into believing their funds were spent. As the short sellers pushed the price down, an unknown buyer suddenly stepped in with fifteen million shares, leaving Zhao Chen and Chen Xi unsure who had joined the fight.

• At market open, short sellers drove Henglong’s price down, and Chen Xi identified retail panic-selling as their strategy.
• Zhao Chen ordered Chen Xi to buy shares in batches, and the defense funds raised the price through the short sellers’ first line of sell orders.
• By 2:00 PM, the allies had spent sixty million and faced another major sell wall, so Zhao Chen arranged additional loan agreements to buy up orders below 5.9 and disguise their remaining strength.
• After the price stalled near 5.95, the short sellers tested the market and then pushed it down, believing the defense had run out of funds.
• An unknown buyer placed three five-million-share orders, sending Henglong’s price surging back toward 6 yuan; Zhao Chen said he had not arranged the purchases.

A mysterious Cayman Islands fund bought up fifteen million shares of Henglong before going quiet, while Zhao Chen waited to see whether it would return. The bears launched a last-minute sell-off and drove the stock to 5.79, leaving the fund manager convinced they had won.

• A fund manager ordered a twenty-five-million-share sell wall at six yuan after a mysterious Cayman Islands account bought fifteen million shares.
• Zhao Chen and his colleagues waited as the stock remained nearly still and the mysterious fund made no further trades.
• The fund manager reduced the sell wall to five million shares, then ordered the bears to cancel it and dump their remaining shares below 5.90.
• The sell-off drove Henglong's stock down to 5.79 with forty seconds left before the market closed, and the fund manager declared victory.

Chen Xi and the others watched a mysterious account absorb the shorts’ massive sell-off and lift Henglong Group’s share price to 6.10, while the fund manager scrambled to borrow more shares and continue the attack. Henglong Group then announced major insider purchases, revealing that Zhao Chen and his allies controlled 82.32% of the company, leaving very few shares available to trade.

• Chen Xi saw a mysterious account buy nearly all 25 million shares dumped by the shorts in the final forty seconds, and Henglong Group closed at 6.10.
• The fund manager realized his short position could face a squeeze and called his backers, including Lin Wanqing, to secure at least 30 million more shares for another attack.
• Lin Wanqing agreed to invest more because she hated Zhao Chen, and the fund manager ordered the trader to keep borrowing shares.
• Chen Xi published an announcement stating that Shen Zhiyi, Su Wantang, Zhang Qingxue, Chen Xi, and other executives had increased their holdings.
• The announcement reported that Zhao Chen and his allies collectively held 461 million shares, or 82.32% of Henglong Group, with fewer than 50 million shares possibly left in circulation.

Zhao Chen and his allies concluded that the short sellers were trapped after their shares were bought up, while the fund manager and his backers planned to launch another attack. As Zhao Chen prepared to leave, Chen Xi brought news of an unnamed woman calling about the mysterious funds.

• Chen Xi reported that Zhao Chen's group and the mysterious funds had bought up the shares dumped by short sellers, leaving the short sellers with none to return.
• Henglong's official account answered questions about the short sellers borrowing Zhao Chen's pledged shares with the reply, "Watch with your eyes open."
• Zhao Chen concluded the short sellers lacked enough shares to force a liquidation and told his allies to wait and watch the next day's market.
• The fund manager, President Wang, Lin Wanqing, and three others agreed to pool money and borrow more shares so they could keep driving the price down.
• Chen Xi interrupted Zhao Chen as he prepared to go home, saying an unnamed woman had called about the mysterious funds.

After Shen Jue invited Zhao Chen to dinner, he rested at home with Su Wantang and decided to leave the next day’s market battle to her. The short sellers resumed dumping Henglong shares, but retail buyers absorbed the selling and the fund manager prepared to spend his remaining shares to push the price below 5.90.

• Shen Jue told Zhao Chen she had caused both of the day’s surges and invited him to dinner after the market closed on Zhou Xi afternoon.
• Su Wantang comforted Zhao Chen at home, and he decided to watch the market rather than interfere while someone else fought for them.
• On June 20, Zhao Chen and his colleagues watched as short sellers resumed selling Henglong shares, though less aggressively than the day before.
• Retail investors and other buyers absorbed the short sellers’ opening dump, halting the price’s fall at 5.98 and pushing it back up.
• The fund manager learned that only 20 million shares remained and ordered his trader to sell them all to drive the price below 5.90.

As Zhao Chen’s side and a mysterious account left few shares available, retail investors overwhelmed the short sellers and drove the stock to 6.75. The fund manager admitted defeat, kept 2 million shares for tomorrow, and left the trading room knowing he had become prey.

• Chen Xi reported that trading volume had reached 56 million shares and the shorts had exhausted their 20 million shares of ammunition.
• The fund manager told his trader to call the backers, admitted they had lost, and tried to secure more funds to keep selling.
• As the stock surged from around 6.10 to 6.75, the trader reported that retail buying had swallowed the sell orders.
• The fund manager realized the mysterious account had drawn a line at last Friday’s closing price, while the backers failed to provide more shares.
• The trader calculated that the shorts had dumped 38 million shares at an average price of 5.95 and had 2 million left, which the fund manager told him to keep for tomorrow.

Zhao Chen arranged to redeem 100 million Henglong shares from the brokerage’s securities lending pool, tightening the squeeze on short sellers. By the close, a fund manager realized Zhao Chen and others had been making coordinated moves while his fund had become trapped.

• Zhao Chen explained that Henglong’s price had stalled at 6.75 as buyers and sellers reached a temporary balance, while short sellers continued to hold their positions.
• Zhao Chen predicted that brokerage notices would soon confirm Henglong’s legitimate margin-lending inventory was depleted, leaving short sellers to buy shares to cover.
• Zhao Chen told Zhang Qingxue to arrange an HK$200 million supplementary pledge and publicize that he had redeemed 100 million shares from the brokerage’s lending pool.
• News of Zhao Chen’s redeemed shares spread through investment chats and financial media, prompting investors to predict that short sellers would struggle to borrow shares.
• A fund manager learned that Zhao Chen’s 100 million shares would no longer be lent out and recognized that the Cayman Islands account’s earlier purchase had been part of a larger plan.
• When the trader asked what they should do, the fund manager looked at Henglong’s 6.78 price and said they should wait to die.

Zhao Chen’s restriction on Henglong shares triggered a short squeeze as the stock surged and short sellers struggled to cover. The price passed its previous level, and the chapter ended when Chen Xi received alarming news.

• Chen Xi and Zhang Qingxue told Zhao Chen that the pledged shares had been released and that securities lending would be suspended.
• Brokerage firms halted lending Henglong shares, leaving short sellers with few shares available to buy back.
• Henglong’s stock climbed from 6.82 to 10.40, then rose again as buyers entered and short sellers remained unable to cover.
• A fund manager watched the price approach 11, received no answers to his calls, and left the trading room, never to return.
• Chen Xi received a phone call at noon, turned pale, and told Zhao Chen that something had happened.

After learning that a short-selling fund manager had died by suicide, Zhao Chen attended a regulatory meeting with Shen Jue and the short sellers to negotiate a closeout. Shen Jue demanded thirty dollars per share and invoked the Volkswagen short squeeze, then suggested that forcing a short squeeze had never been her real goal.

• Chen Xi told Zhao Chen and the others that the short-side fund manager had jumped to his death.
• Zhao Chen and Shen Jue attended a closed-door meeting with regulators, Wang Zong, Lin Wanqing, and the other short-side backers.
• The exchange and regulators proposed a negotiated closeout to prevent the short sellers from defaulting on their 100 million shares.
• Wang Zong offered eight dollars per share, but Shen Jue rejected it and demanded thirty dollars.
• Shen Jue recounted Porsche's 2008 Volkswagen squeeze and said she was being merciful by asking for only three times the price.
• Shen Jue said that forcing a short squeeze had never been her original goal, leaving Zhao Chen wondering what she was really after.

Shen Jue revealed that she had bought 60 million Henglong shares because she believed in the company’s long-term prospects, then agreed to close out the short position at 15 yuan per share. The parties divided the 540 million yuan shortfall, leaving Lin Wanqing facing ruin as the losing investors departed and the winners stayed to divide the spoils.

• Shen Jue said she had bought 60 million Henglong shares and explained her confidence in the company’s future.
• The exchange representative rejected Shen Jue’s 30-yuan price and negotiated a closeout price of 15 yuan per share.
• The brokerage reported that Zhou’s fund had 960 million yuan in assets against a 1.5-billion-yuan obligation, leaving a 540-million-yuan shortfall.
• The regulatory official assigned 270 million yuan of the shortfall to the five investors, with the exchange and brokerage covering the rest.
• Lin Wanqing objected to paying more after losing her 150-million-yuan investment, but President Wang and the other backers refused to support her.
• The exchange representative ordered payment and completion by the next day, after which the losing investors left and the winners remained to divide the proceeds.