This financier has agreed to finance the building of a new infrastructure for a new business venture. He goes out in the marketplace and tells investors how much he thinks the new venture will suceed and sells the idea so much that he quickly raises hundreds of millions of dollars for them and earns big commission checks in doing so. Meanwhile the entrepreneurs actually start off doing really well and their business is succeeding. Butthe financier meanwhile has developed a new investment to sell to investors...its basically a bet that on the new venture....that it will fail and fail miserably. He is so good and so convincing that he has convinced some other investors that not only the new venture will fail but that the investment his other investors made will also crash miserably when the business fails. But there is a problem...the venture is coming along well, its making money, not a whole lot because its a new venture and initial costs have to be recouped, but clearly they are headed towards break even very soon and headed for a lucrative future. That is until a nasty anonymous rumour starts floating that the prospects for the future of the business are not that great.....and suddenly the stock of the new veture plummets and the value of their bonds goes down as well as they are downgraded in credit grade.....oh....and since their grade went down, it means their interest rate on the bonds goes up too, and so does the interest on any short term money that they need to raise to run daily operations. This all starts a downward spiral that is very hard for the new venture to recover from. The stock continues to plummet as the prophecy of doom seems truer and truer and pretty soon the venture cant raise anymore money to operate and can't afford to pay its debt.
The new venture goes belly up and the stock of the intial investors is now worthless, and the bonds are worth pennies on the dollar as well.
Meanwhile, the financier who made tons of dough from selling the stock and the bonds and also made tons of money from selling the bets that the venture would fail, now makes a third round of killing profits when he collects on bets he himself had made that the venture would fail. With all the money he has made.....he now will be bidding on the assets of the now kaput venture and acquire them for fractions of their value...a fourth round of killer profits.
Can a financier make this happen???
The new venture goes belly up and the stock of the intial investors is now worthless, and the bonds are worth pennies on the dollar as well.
Meanwhile, the financier who made tons of dough from selling the stock and the bonds and also made tons of money from selling the bets that the venture would fail, now makes a third round of killing profits when he collects on bets he himself had made that the venture would fail. With all the money he has made.....he now will be bidding on the assets of the now kaput venture and acquire them for fractions of their value...a fourth round of killer profits.
Can a financier make this happen???