A Reuters report said a court in Beijing accepted a lawsuit filed against the securities regulator of China by a former trader of Everbright Securities. Former high-frequency trading unit general manager Yang Jianbo contested the punishment he received from the China Securities Regulatory Commission (CSRC) for insider trading charges. Yang and three other peers were banned from the securities industry for lie and were each ordered to pay CNY600,000, or equivalent to $99,000 by the Chinese regulator, said Reuters.
The CSRC recounted that Yang and his colleagues took advantage of a computer malfunction during the morning trade on August 16. Everbright took a CNY7.27 billion long position in a commonly-traded exchange-traded fund (ETF). Yang and the others unwinded part of their position in the ETF in the afternoon but failed to disclose the original trading error properly.
Reuters said Yang argued that the trading error did not qualify as inside information and that the decision to unwind its position in the ETF in subsequent trades were part of the unit's hedging mandate. He also claimed that the traders' action on its position with an ETF was not an exceptional response to the error-tainted orders.
CSRC, after wrapping its investigation on Yang and three of his colleagues, handed out the harsh penalties in late August of last year after the latter deemed that there was evidence that the traders were guilty of insider trading. On February 8, Beijing-based Zhong Zhao Law Firm partner Li Jiang, who now counsels Yang, submitted the lawsuit on behalf of his client, the news agency said.
Telling Reuters over the phone on Tuesday, Yang said, "The court has accepted the suit. Now we'll move forward with the case according to normal legal procedure."
Reuters had not obtained nor if there was a knowledge whether CSRC has been informed of the lawsuit filed against the agency.
