China's Everbright probed over share spike
BEIJING Aug 18 (Reuters) - China's securities regulator pledged on Sunday to launch a formal investigation into major brokerage Everbright Securities Co Ltd after a dramatic 5 percent spike in domestic stock indexes last week that many suspected was the byproduct of a trading error.
"The China Securities Regulatory Commission (CSRC) has decided to formally open an investigation into Everbright Securities," a CSRC spokesman was quoted as saying in a statement posted on the regulator's website.
"Based on the results of the investigation, CSRC will seriously deal (with Everbright Securities) in accordance with the law and make an announcement to the public in a timely manner," the spokesman said.
An initial examination "found no man-made operational mistakes", the spokesman said, adding that Everbright's information system management had many problems.
It was the "first (such) case since China's capital market was established, an extreme, isolated incident," the spokesman said.
Lessons should be learned and loopholes plugged to prevent any recurrence, he added.
The city's securities regulator "has decided to adopt administrative regulatory measures (against Everbright), suspend its related businesses and instruct it to rectify and reform," the statement said. He did not elaborate.
Everbright said in a filing to the Shanghai Stock Exchange following the spike that its trading system encountered problems on Friday morning. Trading in the brokerage's shares was suspended in the afternoon.
The brokerage said its strategic investment department's proprietary trading bureau had a problem when using its own arbitrage system and that it was investigating the issue.
The 21st Century Business Herald, a Chinese business newspaper, reported that Everbright was applying to cancel all its morning trades. (Reporting by Shen Yan and Benjamin Kang Lim; Editing by Nick Macfie)
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