Everbright Sued by Investors in Guangzhou and Shanghai
By Bloomberg News - 2013-09-03T07:44:34Z
Everbright Securities Co. (601788), ordered by China’s securities regulator to pay a record 523 million yuan ($85 million) for insider trading, was sued by investors in Guangzhou and Shanghai seeking damages for losses.
Courts in the two cities have received the claims and haven’t yet decided whether to accept them, Ye Xiaolei and Yan Yiming, lawyers for the investors, said today.
State-controlled Everbright sold exchange-traded funds and index futures on Aug. 16, before telling the market it had made 23.4 billion yuan of erroneous buy orders, the China Securities Regulatory Commission said last week. The regulator barred the company from most proprietary trading, and banned four of its executives from the market for life.
“These lawsuits show that investors in China are increasingly aware of their legal rights,” said Jessica Fei, a Beijing-based disputes partner at Herbert Smith Freehills. Many civil cases are still concluded through court-facilitated settlements, she said.
The CSRC didn’t reply to a faxed query seeking comments and three phone calls to Everbright’s offices in Shanghai went unanswered today. The company hasn’t commented on the CSRC ruling.
The Guangzhou investor is seeking 70,000 yuan in compensation from Everbright and the Shanghai Stock Exchange, Ye said by telephone from Shenzhen today. The Shanghai investor is seeking about 99,000 yuan, Yan said by phone from Shanghai.
Beijing-based lawyer Zhang Yuanzhong said his firm had been contacted by investors who claim damages of more than 1 million yuan for their losses due to the market turmoil. Everbright’s orders helped push the benchmark Shanghai Composite index from a loss of as much as 1 percent to a gain of 5.6 percent in two minutes.
Chinese securities law allows investors to file civil suits for losses arising from insider trading, the CSRC said in the statement that detailed the penalties on Everbright. The brokerage has the right to request a hearing with the CSRC before the penalties become final, the regulator said.
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