In stark contrast to New York, which was buried under heavy snow as a fierce Arctic cold wave swept in, the Bahamas, nestled in the warm Caribbean, blazed under a scorching sun in a cloudless, perfectly clear sky.
Rodney, the CEO of K Capital, a Wall Street hedge fund, was lounging leisurely on a sunbed on a private beach reserved exclusively for resort guests, wearing shorts and a linen shirt with a couple of buttons undone.
Lifting his glass of gin and tonic, Rodney took in the emerald sea and white sandy beach, a scene as picturesque as a painting.
Whoooosh.
"Mom! Look at this!"
"It's a heart-shaped stone! I found it!"
On the white sandy beach where the pale waves rolled in, his wife and two daughters were splashing around in the water, bursting into laughter.
"Perfect."
Rodney let out a satisfied breath.
After escaping Wall Street, where every moment felt like a fierce battlefield, and spending some relaxed time with his family, even his mind felt like it was finally loosening up.
"We should come back here again for next Christmas vacation."
After taking a sip of his gin and tonic and setting the glass down, Rodney was lying back comfortably on the sunbed when the satellite phone he had placed on the table began to ring.
Annoyed by the sound that interrupted his peaceful time, Rodney picked up the satellite phone and pressed the call button, frowning slightly.
[Rodney. It's me.]
Hearing the voice of his closest aide and K Capital's CIO, Dale Klein, Rodney relaxed his expression and made a light joke.
"You're really going to interrupt my Christmas vacation with my family? That's a bit much, don't you think?"
[I'm sorry, but something urgent has come up that I needed to inform you about right away.]
Hearing the stiff, rigid tone of voice, Rodney sensed at once that something was seriously wrong and sat up.
"What is it?"
[CNBC just broke an exposé saying that WorldCom committed accounting fraud on the scale of tens of billions of dollars.]
"...!"
Rodney's eyes went wide. The warm sunlight and the peaceful sound of the waves no longer reached his ears.
"WorldCom cooked the books? Is that for sure?"
[According to the report, the company's management inflated assets and earnings for years to keep the stock price high, overstating the figures in the books by as much as 11 billion dollars. And the accounting firm that was supposed to prevent and monitor this knew the truth and turned a blind eye.]
"This is insane…"
It was so absurd that Rodney could only let out a hollow laugh.
Then, frowning, he asked,
"What kind of accounting firm would pull something like that?"
[Arthur Andersen.]
"Damn it!"
When he heard that name again, the one he had grown sick to death of hearing during the Enron scandal, Rodney let out a harsh curse without realizing it.
He immediately swung his legs off the sunbed, sat up, and, contorting his face, tossed his sunglasses onto the table as if throwing them down in frustration.
"If Arthur Andersen, which already has a track record, is involved, then there's a high chance the CNBC report is true."
[I think so too. The fast movers have already started acting, and in the over-the-counter market, WorldCom's stock and bonds are plunging.]
"We all just watched Enron go bankrupt not that long ago. Everyone's going to panic and start dumping whatever they're holding."
[It's still just a rumor, but there's talk that the SEC has convened an emergency meeting to discuss opening an investigation into WorldCom.]
"Those SEC guys are usually slow as molasses. What's gotten into them, moving so fast?"
[Isn't that because of the aftermath of the Enron scandal?]
"Yeah, I suppose that makes sense."
Rodney gave a bitter smile, then frowned at what came next.
[If everything in CNBC's report turns out to be true, this will become the largest corporate accounting fraud scandal in history, even bigger than Enron.]
"Grr…"
Letting out a groan, Rodney roughly ran a hand through his hair.
"Fear is going to spread through the market; everyone will dump their positions and rush to secure cash. The indices are obviously going to take a big hit."
[We're already seeing signs of that in the futures market.]
Of all times, for a bombshell like this to explode at year's end, when trading volume was low, and volatility was high. It was nothing short of a Christmas nightmare.
[The shock looks like it's going to be significant. Shouldn't we start taking action on our end as well?]
Fortunately, WorldCom wasn't in their portfolio, but if the entire stock market took a nosedive, K Capital, which Rodney managed, would have a hard time avoiding the fallout.
"Tsk."
Clicking his tongue briefly, Rodney made a quick decision, knowing that in times like these, hesitating and missing the timing could only make the losses bigger.
"Dump everything in the portfolio. Sell it all."
[You mean not just selling part of it for risk management, but liquidating everything into cash?]
Klein asked again in surprise.
"That's right. If we clean things up now, our returns will shrink, but at least we won't lose the principal. If we hesitate, we're going to take a much bigger hit."
[So you think this won't just be a short dip, but a shock that drags on.]
"With the Argentina situation and fears of a recession already making the market nervous, and now a bombshell like this exploding, it won't be easy for things to rebound."
There was a brief silence on Klein's end before he replied, as if conceding the point.
[…You're right.]
Just then, Rodney's eyes lit up as he said something unexpected.
"Maybe this is an opportunity."
[What do you mean?]
"As we already learned from the Enron scandal, the deeper the drop, the bigger the rebound, isn't that how it goes?"
Klein immediately caught on to what he meant and responded.
[So you're planning to quickly raise cash and then scoop up stocks that have fallen too far at bargain prices.]
A confident smile spread across Rodney's face.
"That's right. So hurry up and unload everything before the market goes into a panic."
[Understood.]
After giving a few more instructions and ending the call, Rodney's expression settled into a serious look.
He had moved to respond immediately, but the sudden appearance of such a massive, completely unexpected piece of bad news left his mind in turmoil.
Then, recalling that the Eldorado Fund had taken a large short position in WorldCom, Rodney muttered with a bitter smile,
"Just like with Enron, Chairman Park was one step ahead again this time."
After leaving Quantum Fund and founding K Capital with a huge amount of invested capital, he had achieved considerable success, which had helped him shake off, to some extent, the sense of defeat he had felt toward Seok-won.
But seeing Seok-won once again move faster than anyone else and reap huge profits on his own, it felt as though the gap between them was not narrowing, but growing wider and wider, leaving him with a bitter taste.
It felt like standing in front of a massive wall he could never hope to overcome.
With a rough, gritty taste in his mouth, as if he were chewing sand, Rodney clenched his fist and, without giving in to despair, vowed that even if things were hard now, he would one day catch up to Seok-won.
When his wife, who had been playing with their daughter, smiled and waved at him, Rodney waved back lightly, as if nothing were wrong.
Then, with a serious expression, he went back to thinking over how to turn this situation to his advantage and make a profit.
***
December 26, 2001.
From early morning, all of Wall Street in New York was wrapped in a taut sense of tension.
Hundreds of traders had gathered at the New York Stock Exchange, but instead of the usual chatter, they stood in heavy silence, staring up at the large market board.
It was because of CNBC's explosive exposé that had come out on Christmas Eve.
The aftershocks of the Enron scandal, which had ended in bankruptcy, had not even fully settled yet, and now another large-scale accounting fraud allegation had erupted. It was only natural that everyone felt their hearts sink.
Moreover, if the allegations were proven true, it would certainly become the largest accounting fraud case in history, pushing the anxiety to its limit.
Ian Jefferson, the chief trader at Salomon Smith Barney, was also biting his nails repeatedly with an uneasy expression, unable to take his eyes off the monitor displaying the index futures.
"The futures on all three major indices are down more than five percent. This doesn't look good at all."
The senior trader beside him said it cautiously, glancing over.
Jefferson forced himself to act calm and lifted his chin slightly.
"We expected there would be a shock. Let's wait and see how things change once the regular session opens in a bit."
Of course, inside, he was spewing curses nonstop, thinking it was going to be impossible to avoid a crash.
Just then, a junior trader who had been watching the Bloomberg terminal turned his head and spoke in an urgent voice.
"WorldCom's management has just announced that while there were some accounting errors due to mistakes, there was no intentional manipulation of the books. They claim it was merely a simple error caused by miscommunication and oversight."
"Let me see!"
Jefferson hurried over and checked the breaking news article that had popped up on the Bloomberg terminal, his face twisting at once.
"Damn it! Either way, they're admitting that their accounting books were wrong!"
It was the moment when the accounting fraud, which had so far remained only an allegation despite the exposé, was effectively confirmed as fact.
Sure enough, the exchange erupted into a commotion, and the index futures began reacting immediately to the breaking news.
"The futures on all three major indices, the S&P 500, Nasdaq, and Dow, are all deepening their losses!"
"Sell orders are pouring in, and in the over-the-counter market, WorldCom's share price has fallen below ten dollars!"
"It's not just WorldCom. The sell-off is spreading across the entire telecom sector!"
At the ominous shouts coming from all directions, Jefferson's face grew more and more rigid.
At the same time, the previously quiet phones began ringing all at once, and as the traders picked up the receivers, sell orders started pouring in like a flood.
"Got it, sell 30,000 shares of Sprint!"
"The opening call is even lower, so it'll be hard to sell AT&T at that price."
"JPMorgan and GE Capital, both to be sold at the opening price?"
The fear that had started with telecom stocks spread rapidly across the entire stock market, jumping from the financial institutions that had lent to WorldCom like a malignant virus.
Sure enough, the statement WorldCom's management had just released had acted as the trigger, pushing investors into a full-blown sell-off.
Seeing the massive pile-up of sell orders as the market fell into panic even before trading began, the last shred of hope disappeared.
Just as Jefferson had a gut feeling that the market would have a hard time avoiding a crash today, the senior trader announced another piece of fresh breaking news.
"The SEC says it's launching an investigation into WorldCom and Arthur Andersen over the accounting fraud allegations!"
"Shit! They're really determined to blow the market to pieces!"
Frowning deeply, Jefferson snapped irritably.
The SEC had been under heavy criticism for failing to stop the Enron scandal in advance, so they were now moving immediately to avoid a repeat of that situation.
But in a market where fear was already spreading because of WorldCom management's statement, this was like throwing more fuel on the fire. There was no helping the curses that spilt out of Jefferson's mouth.
"The market is open!"
The moment the opening bell rang, the huge market board was stained red like blood.
Seeing almost every stock falling, groans and sighs erupted all around the exchange as people clutched their heads.
But that didn't last long.
With ear-splitting phone rings and an endless flood of sell orders, the traders shouted themselves hoarse and frantically hammered at their keyboards to enter orders.
Jefferson, too, bit down hard on his lower lip and urged his team on, trying to get as many orders filled as possible; even one more would help.
"Don't just stand there like an idiot. Get the orders in right now! Move!"
And so, the panic that began in New York quickly crossed the Pacific and spread just as rapidly to Asia and Europe.