Cheating securities firm told to pay up
Print Edition
EVERBRIGHT Securities was yesterday ordered to pay almost 300,000 yuan (US$47,200) in compensation to six investors who suffered losses as a result of the firm’s insider trading in 2013.
The plaintiffs were awarded between 2,220 yuan and 200,980 yuan each in accordance with their individual circumstances, said the Shanghai No. 2 Intermediate People’s Court, adding that all payments should be settled within 10 days.
On August 16, 2013, a glitch in Everbright’s trading system triggered a deluge of orders that caused huge swings in the Shanghai stock market, with the benchmark index shooting up 5.9 percent in just two minutes.
The China Securities Regulatory Commission accused the brokerage of insider trading by making a large number of hedge trades before it disclosed the glitch to the public.
The court supported the ruling, saying Everbright’s act constituted insider trading, and that it was at fault for not informing the public of the trading error in a timely manner when it had the ability to do so.
Damage claims filed by two other investors were rejected as there was no cause-and-effect relationship between their losses and Everbright’s misconduct, the court said.
Xu Feng, a lawyer acting for some of the plaintiffs, said their success was likely to encourage more investors to file compensation claims.
“We expect to see numerous lawsuits against Everbright after the National Day holiday as the deadline for filing is November 14,” the lawyer said.
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