China’s securities regulator has imposed a record penalty on Everbright Securities after finding the state-controlled broker engaged in insider trading as it roiled the nation’s equity markets with errant trades two weeks ago.
Four people including ex-President Xu Haoming will be banned from markets for life and the brokerage was barred from most proprietary trading, it said.
The CSRC had initially barred Everbright from trading using its own money for three months after erroneous buy orders on August 16th sparked the biggest swing in China’s benchmark equity index since 2009. The misstep, combined with glitches this month at Goldman Sachs Group Inc. and in the Nasdaq Stock Market, has fueled concern that electronic trading systems are unreliable.
'The penalty is quite a harsh one, as the Everbright error had a huge impact on the market', Wei Tao, a Beijing-based analyst at China Securities, said by phone. 'With the CSRC saying this is an insider trading incident instead of just a trading error, this will put downward pressure on the shares of Everbright Securities, at least in the near term'.
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