Court accepts Everbright GM's case against watchdog

"I have never doubted whether the court will accept my suit or not because the facts are mostly known to the general public. I believe I will get a just result," said Yang.

Regulator sets final penalties for trading error by Everbright

Securities watchdog to boost regulations

Two software bugs, one in the trading system created by an outside provider and the other in Everbright's arbitrage system, caused a trading error what mistakenly sent huge buy orders valued at 23.4 billion yuan on Aug 16. Of this, 7.27 billion yuan was transacted. The big buy order lifted the benchmark Shanghai Composite Index 5.96 percent in three minutes.

In an earlier interview with China Daily, Yang admitted the existence of the bugs but said it was wrong for the commission to classify Everbright Securities' case as insider trading. "This case and the business of the strategic investment department are all beyond the knowledge of the general public as well as the commission ," he said.

Yang Yifei, a lawyer with Beijing-based Zhong Zhao Law Firm, is one of the two attorney agents in Yang's case against the commission. He also agrees that the Everbright Securities case should not be determined as insider trading, saying it was just a mistaken buy order. He added members of the commission were at the company when the case incident occurred on Aug 16.

"According to the present Securities Law of the People's Republic of China and Administrative Regulations on Futures Trading, there is neither regulation nor rule equating the above two or an explicit definition of insider trading," he said.

The latest amendments to the Securities Law were made in 2005. The Everbright Securities case will help develop the maturity of the law. It will also prompt the commission to enforce its duties more carefully, said the lawyer.

The commission fined Everbright Securities a record 523 million yuan for the alleged infringement. The securities company's former president Xu Haoming, assistant executive Yang Chizhong and secretary of the board of directors Mei Jian resigned shortly after the case. Xu and Yang, together with Shen Shiguang, general manager of the accounting department, and Yang Jianbo were fined by the commission and banned from any work involving the stock exchange.

The net profit of Everbright Securities was 212 million yuan in 2013, down 78.79 percent year-on-year, with earnings per share dropping to 0.0622 yuan.

 

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Everbright Securities fined for insider trading