CSRC comes down heavy on Everbright Securities
02 September 2013
By Hui Ching-hoo
China Securities Regulatory Commission (CSRC) has ruled that a trading glitch associated with Everbright Securities involved insider trading; it has imposed a lifetime ban on four employees of the securities brokerage from participating in any securities-related activities, according to a report from Xinhua news agency. The CSRC hasn’t yet disclosed any details of the actual wrongdoings that had taken place but did name the offenders as Xu Haoming, Yang Chizhong, Chen Shiguang, and Yang Jianbo.
The market watchdog also confiscated profits worth 87.2 million RMB (US$13.8 million) relating to insider trading and fined Everbright Securities 523 million RMB.
The incident took place on Friday, August 16 when trading glitches attributed to Everbright Securities caused a 6% spike to the Shanghai Composite Index. A CSRC spokesman was quoted then by Mainland financial website Yicai as saying the issue reflected deficient internal controls and trading system management by the firm.
The trading glitches resulted in massive market orders sending same-day actual turnover on the Shanghai Stock Exchange to 7.29 billion RMB (US$1.16 billion). Meanwhile, Everbright Securities was forced to short 1.85 billion RMB of ETFs and 7,130 lots of stock index futures contracts to counter its position.
Everbright Securities issued a statement on the same day admitting that its strategic investment department’s proprietary trading desk had a problem with an arbitrage deal relating to its 180 ETF.
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