In the financial turmoil of mid-October, the U.S. junk bond market was left in complete shambles.
A swarm of short-sellers made a killing, while even more people lost everything, wiped out to the last cent. So, whether it was out of a desire to throw out a scapegoat to distract the media, or for some other ulterior motive, there no longer seemed to be any need to keep Cersei Capital's role in this crisis under wraps.
Saturday, October 21.
New York's Daily News suddenly ran a story with the headline: "Westeros Comes, and the Crash Comes With Him."
In a half-joking, half-sensational tone, the article revisited how the Japanese stock market had plunged the last time Simon flew to Melbourne to visit his girlfriend. It then pointed out that in the week leading up to the October 13 "mini crash," Simon Westeros and Janet Johnston had just happened to be in New York for seven days.
If it had stopped there, it would not have been a big deal.
However, as a gossip rag positioned much like the New York Post, the Daily News went on in that piece to expose all kinds of inside information about Cersei Capital, including the firm's most closely guarded data on net asset value. It wrapped up by steering the narrative toward Cersei Capital joining forces with Australian consortiums to help bring down the U.S. junk bond market, then raking in enormous profits through short positions.
Cersei Capital had indeed booked 1.6 billion dollars in revenue over that one week, so in that sense, the Daily News article was not wrong.
Its intentions, however, were clearly anything but pure.
Just the way it framed "Cersei Capital joining Australian capital to destroy the U.S. junk bond market" was viciously calculated, as if trying to hang on Simon the label of a traitor who invited foreign wolves into the house. Simon himself felt little sense of belonging to the country he lived in, but he understood all too well what kind of shockwave that kind of public opinion could send through his personal image and business empire if it took hold.
As a result, the Westeros Corporation's PR team immediately launched a counterattack against the Daily News piece, pointing out that the short-selling funds targeting the U.S. junk bond market totaled over 30 billion dollars, making it impossible for any single capital group to be the mastermind. The real root cause of the collapse, they stressed, was companies like United Airlines recklessly issuing bonds far beyond their own strength. The Daily News' attempt to pin the crash of the junk bond market on Cersei Capital was nothing but slander.
The Westeros Corporation did more than issue a public rebuttal. It demanded that the Daily News retract the article and publish an apology on its front page. Otherwise, Westeros would file suit.
As a follow-up to this counterstrike, Daenerys Entertainment immediately announced that it was pulling the film advertisements it had originally planned to place with the Daily News.
James Rebould personally called Mortimer Zuckerman, the power behind the Daily News, and with a veiled warning reminded him that, if necessary, Daenerys Entertainment could easily push at least half of Hollywood's major studios to yank their ads from the Daily News. Every other newspaper and magazine under Zuckerman's publishing group would likewise find itself unwelcome in Hollywood.
With Hollywood's marketing spend on movies climbing year after year, every major studio had become an important ad client for mainstream American media. Mortimer Zuckerman simply could not afford to lose over half the Hollywood market. So the very next day, the Daily News announced it was retracting the article and issued an apology statement on its front page.
The way the Daily News caved in less than twenty-four hours was dramatic to say the least. Westeros Corporation's sudden, dragon-from-the-shadows strike was so swift and fierce that many people realized a powerful capital force had quietly taken shape in this country.
What defines a mere upstart is that such people usually lack the power and deep-rooted backing to match their wealth. Even if your net worth is ten or a hundred times that of an old-money family, they will still look down on you, dismiss you, pretend you are not there.
If Simon Westeros were just some nouveau-riche billionaire who had gotten rich overnight, the American media, with all its vaunted "freedom," would never have paid any attention to Westeros Corporation's demands. The Daily News' capitulation clearly showed that this newly-minted tycoon, who had risen to prominence in just three short years, had already built up potential clout and influence commensurate with his vast fortune.
So, even though Westeros Corporation's pressure on the Daily News carried a rather obvious flavor of "the more you try to cover it up, the more conspicuous it looks," out of fear and wariness toward Simon Westeros, once the Daily News retracted the article and apologized, the rest of America's mainstream media prudently avoided continuing to poke at such a sensitive topic.
No matter how strong a spark is, without fuel it can never flare into a blaze.
When the major newspapers chose to look the other way and the mainstream TV networks refused to discuss it, the Daily News' line of attack flashed for only a brief moment before quickly drowning in the tides of other news.
In the end, this was the power of capital.
Still, while no one in the media dared push Simon any further toward the label of "traitor," the fact that Cersei Capital had joined the short side of the North American junk bond market was now firmly established.
Simply talking about how much more money Simon Westeros had made, or poking a little into Cersei Capital's inner workings, did not seem to be taboo. Some papers, unable to resist such a guaranteed attention-grabbing topic, ran similar reports after a few rounds of internal hand-wringing. When those pieces failed to provoke any displeasure from Westeros Corporation, other outlets began to follow suit.
Of course, the inside story of how Cersei Capital operated was not something just anyone could ferret out. Most papers got nothing more than the half-public information of the sort the Daily News had acquired through channels that were not exactly deeply hidden.
Even so, this world has never lacked people who pay attention.
For some, the fact that Cersei Capital had set up Subfunds No. 6 through No. 10 was hardly a secret. It was just that most of those in the know had overlooked certain deeper implications.
For example, where had the capital for Subfunds 6 through 10 actually come from?
The net value of Cersei Capital's Subfunds 1 through 5 had doubled in less than a year. Naturally, many people simply assumed that if Simon Westeros wanted to raise a large additional pool of capital, it would be a trivial matter for him, and thus few bothered to scrutinize the precise source of the money.
But there are exceptions to everything.
Manhattan.
For reasons everyone in the industry understood, Noah Scott, who had helped Simon Westeros operate S&P 500 index futures during the '87 crash, had taken over, from the end of last year, a derivatives hedging and arbitrage team under Lehman Brothers that specialized in overseas financial markets.
Now, in less than a year, the 1.5 billion dollars that team managed had already grown to 2.6 billion.
A 70 percent rate of return had made Noah Scott one of the most eye-catching young executives inside Lehman Brothers. Yet these past few months, he had been living with an undercurrent of unease.
Because he needed to focus on the Japanese market, Noah had not gotten involved in Lehman Brothers' own operations in the U.S. junk bond market. The October 13 "mini crash" in U.S. equities, and the subsequent flood of information from all sides, gradually convinced Noah that his nagging suspicion might actually be correct.
American Express headquarters at Rockefeller Center.
Even though it was Sunday, American Express CEO James Robinson, several other core AmEx executives, and Noah Scott's father, Nelson Scott, who also sat on the AmEx leadership team, had gathered in a conference room at headquarters to listen in person to Noah's confidential report.
"I've gone over Cersei Capital's operations in the Japanese market in detail. Based on the information we've obtained from all sides, their trading clearly breaks into three stages. The first starts roughly from the end of last year through March of this year. To be precise, right up until the time Simon Westeros collapsed from overwork and fell into a coma. During that period, Cersei Capital's strategy was conservative and steady, focused on long-term trend investing. That should have been Simon Westeros himself calling the shots. From March to July, Cersei Capital's style suddenly turned aggressive, with many ultra-short-term, high-leverage, high-risk trades showing up. As someone who used to be his classmate, I'd say with confidence that this period was Janet Johnston running the show."
Noah paused here for a moment, then quickly went on, "After July, Cersei Capital's trading patterns become impossible to read."
James Robinson had been leafing through a thick dossier of internal Cersei Capital intelligence that Lehman Brothers had compiled using vast resources, personal networks and even some less-than-clean methods. Hearing this, he looked up and asked, "Noah, what exactly are you trying to say?"
Noah gathered his thoughts. "Jim, ever since the end of June, when Simon Westeros took a trip to Melbourne, Cersei Capital's operating style changed again. This time it matches neither Westeros nor Johnston. It's neither conservative nor what you'd call aggressive. They're simply maintaining a very high level of long exposure, continuing to bet on a rising Japanese market through heavy positions."
Noah's father, Nelson Scott, spoke up. "Noah, aside from Westeros and Johnston, isn't there another person in charge at Cersei Capital? The eldest Johnston, Anthony Johnston. Maybe he took over operations?"
"Anthony Johnston is only responsible for Cersei Capital's finances. He doesn't participate in running the trades. And Janet Johnston is obviously far more capable. Why would Cersei Capital's investors ever let Anthony, who barely understands the business, take the helm?"
Another senior executive asked, "Maybe Janet Johnston has shifted her attention to North America?"
"Impossible. Even if Janet Johnston turned her focus to North America, she would still keep a close eye on Japan. There is no way Cersei Capital's trading style in the Japanese market would change so completely." Noah stopped stringing them along. "That's why I've long suspected that something happened inside Cersei Capital that we haven't been able to uncover. It's been bothering me for months. Only with the recent collapse of the junk bond market did it finally click."
Everyone in the conference room turned their eyes to Noah Scott.
Noah simply stood up, walked to the whiteboard at the front of the room, picked up a marker and began writing quickly as he explained, "At the end of June, Simon Westeros flies to Melbourne. In early July, Cersei Capital launches Subfunds No. 6 through No. 10. During that same period, the trading style of Subfunds 1 through 5 in Japan changes. Then, more recently, based on our information, the capital Cersei Capital deployed to short the federal junk bond market is not less than 3 billion dollars. Three billion. A sum that large does not get raised quietly in the dark. So think about it carefully: where did the 3 billion for Subfunds 6 through 10 really come from?"
As soon as he finished, Noah did not actually wait for them to speculate. He simply drew several arrows on the whiteboard, linking the diagram for Cersei Capital's Subfunds 1 through 5 straight over to Subfunds 6 through 10.
Everyone present was a top-tier professional who had clawed their way up in this industry for years. They did not need much more spelling out. Feeling a chill shoot up his spine, James Robinson shot to his feet and blurted out, "Westeros has already cashed out!"
Recently, the Japanese stock market index had already broken through the 39,000-point mark and was charging straight toward 40,000.
If Simon Westeros had cashed out and left in July, then by late October everyone had already been played for more than three months. After more than three months, Lehman Brothers' huge positions were still completely tied up in the Japanese market. So who dares say what will happen next?!