A former Everbright Securities executive who was banned for life from the mainland's stock markets following a trading error last year has accused China's securities regulator of hiding records of communication.
Yang Jianbo, the former head of an Everbright trading department, had his lawsuit against the China Securities Regulatory Commission (CSRC) heard by the Beijing No1 Intermediate People's Court yesterday. Yang asked the court to overturn his punishment, and cast doubt on the regulator's professionalism and integrity during yesterday's one-day hearing.
"I told the court that there was a lot of room for the regulatory officials to improve their capabilities," he told the South China Morning Post. "I also pointed out that they committed wrongdoings, which included hiding evidence and cheating."
The lawsuit resulted from a trading error on August 16 last year when a computer glitch caused Yang's department to mistakenly place a buy order worth 7.27 billion yuan (HK$9.14 billion), sending the key index up more than 5 per cent within a few minutes in the morning session.
Everbright hedged the risk exposure in the afternoon before issuing a public statement but was slapped with a record fine of 523 million yuan later as the regulator deemed the resulting share sales on the Shanghai Stock Exchange and short-selling on the China Financial Futures Exchange to be "insider trading".
Yang and three other top Everbright managers, including president Xu Haoming, were "expelled" from the stock markets but Yang said the CSRC and the exchanges were fully aware of the brokerage's decisions to pare its position in the afternoon before the transactions were made.
Yang, 37, who holds a doctorate in finance from the University of Manchester, was the only one of the four former Everbright officials to take the CSRC to court.
The court is expected to hand down its judgment next month.
Analysts said the regulatory framework on the mainland still had many loopholes, which had hindered the long-term growth of the capital market.
The trading scandal triggered a chorus of criticism from mainland investors, with Everbright accused of lacking necessary risk-control mechanisms and the CSRC accused of failing to properly police the roller-coaster market. A bear run since 2010 has left most retail investors with losses.