Everbright not out of the spotlight as fiasco brings down president
Print Edition
Everbright Securities’s president and director, Xu Haoming, resigned amid an investigation into the brokerage for erroneous buying orders that caused an aberration in the Shanghai stock market last week.
Chairman Yuan Changqing will become the acting president, Everbright said in a filing to the Shanghai Stock Exchange yesterday.
Trading of Everbright shares was suspended yesterday afternoon and would resume today, the brokerage said without elaborating.
Everbright lost 2.8 percent to 9.98 yuan (US$1.6) in yesterday’s morning trading, resulting in an 18.8 percent plunge this week. The brokerage lost 7.3 billion yuan of its market capitalization.
Meanwhile, the National Association of Financial Market Institutional Investors, a watchdog of China’s interbank market, barred Everbright from underwriting for bond financing of non-financial companies, starting Tuesday, the brokerage said in a separate filing to the city’s exchange yesterday.
“The error trading exposed significant problems in Everbright in terms of inner control and risk management, making the brokerage unqualified as a bond underwriter,” the association said as quoted in the filing. It didn’t say when the ban will be lifted.
A glitch in Everbright’s proprietary trading system sparked a deluge of orders that caused the composite index rocketing 5.9 percent in two minutes on August 16. The broker said it lost 194 million yuan from the trading error, based on its closing price that day.
The China Securities Regulatory Commission has suspended Everbright from conducting proprietary business for three months until November 18.
Yang Jianbo, head of Everbright’s strategic investment department, has been suspended and is assisting the investigation into the trading blunder.
Everbright said late yesterday its net profit fell 2.2 percent annually to 810.9 million yuan in the first half of this year, a sharp easing from a 27 percent fall a year ago. Revenue rose 13.24 percent to 2.4 billion yuan, up from a 33 percent fall in the first half of 2012.
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