UPDATE 1-China fines Everbright for insider trading, bans ex-president
(Adds details from CSRC)
BEIJING Aug 30 (Reuters) - China's stock regulator said it has fined Everbright Securities 523 million yuan ($85.5 million) and barred the brokerage's former president from the industry for life, after uncovering evidence of insider trading and other irregularities.
A glitch in Everbright's computer system caused an unintended placement of buy orders worth 68.6 billion yuan ($11.2 billion) to the Shanghai stock exchange on Aug. 16 and led to a massive but short-lived jump in the country's main stock index.
While the exchange's risk control system reduced the spike in orders, mistaken orders worth 23.4 billion yuan still reached the bourse and nearly a third of those were traded.
Everbright then built up huge short positions in index futures and exchange-traded funds before disclosing details of the trading glitch, knowingly breaking exchange rules, and some brokerage executives deliberately circulated information that misled investors, the China Securities Regulatory Commission (CSRC) said on Friday.
Xu Haoming, former president of Everbright Securities who was replaced on Aug. 22, was barred from the industry for life, as were three other executives. They are: Yang Chizhong, assistant president and head of research; Shen Shiguang, director and head of finance; and Yang Jianbo, manager of the strategic investment department.
The brokerage made a profit of 87.2 million yuan from the trades, which the regulator has confiscated, the CSRC told reporters at a briefing.
Trading in shares of the mid-sized brokerage was suspended earlier on Friday, pending an announcement. Everbright declined to comment.
The CSRC also said it would suspend approvals of any new businesses by Everbright Securities, and investors who suffered losses from the trading glitch can take the brokerage to court and demand compensation.
The CSRC has already barred the brokerage from offloading the shares it mistakenly bought on that day for the next three months, forcing it to consider selling some of its securities holdings to help cope with a possible funding crunch.
The brokerage has also been suspended from lead-underwriting any new debt financial instruments by non-financial enterprises in the country's interbank market. ($1 = 6.1205 Chinese yuan) (Reporting by Ding Qi, Lu Jianxin and Jonathan Standing; Writing by Langi Chiang; Editing by Ryan Woo)
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