Everbright on trial as investors sue
Print Edition
A Shanghai court yesterday heard arguments in lawsuits filed by 61 investors against Everbright Securities, all of whom claim a glitch in the brokerage’s trading system last year that sparked a dramatic swing in the stock market caused them significant losses.
In a joint trial at the Shanghai No. 2 Intermediate People’s Court, attorneys for the retail investors said that during the incident, Everbright violated laws and regulations regarding insider trading, price manipulation and the making of false statements.
Everbright’s misconduct was to blame for the losses and the company should provide recompense, the lawyers said.
The court did not say how much compensation is being sought, but attorney Xu Feng told Shanghai Daily that the figure is between 6 million (US$972,000) and 7 million yuan.
Everbright denied all of the allegations and argued that the investors were liable for their own losses after making deals based on irrational speculation during the market swing.
The incident happened on August 16, last year, when a glitch in Everbright’s trading system triggered a deluge of orders that caused huge swings in the Shanghai stock market and drove the benchmark index up 5.9 percent in two minutes.
Aside from the investors’ suits, the brokerage has been accused of insider trading by the China Securities Regulatory Commission for making a large number of hedge trades before it disclosed the glitch to the public.
Everbright, however, denied the charge, saying the trading error could not be interpreted as insider information as it was widely reported by the media soon after it happened.
It also asked the court to halt proceedings on the grounds that the case is based on a punishment issued by the CSRC last year, which is the subject of a separate case currently being heard in Beijing.
The Shanghai court didn’t issue a ruling yesterday.
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