SHANGHAI Feb 18 A Beijing court has agreed to accept a lawsuit filed against China's securities regulator by the former head of a trading unit at Chinese brokerage Everbright Securities, who is contesting the punishment he received for insider trading.
Yang Jianbo, former general manager of a high-frequency trading unit at Everbright, and three colleagues were banned for life from the securities industry and fined 600,000 yuan ($99,000) each by the China Securities Regulatory Commission (CSRC) in late August after its investigation determined that they had committed insider trading.
Yang's lawyer, Li Jiang, a partner at the Beijing-based Zhong Zhao Law Firm, submitted a complaint to Beijing First Intermediate Court on Feb. 8.
"The court has accepted the suit. Now we'll move forward with the case according to normal legal procedure," Yang told Reuters by telephone on Tuesday.
The CSRC found that after a computer malfunction during morning trade on Aug. 16, which caused Everbright to take a 7.27 billion yuan long position in a commonly-traded exchange-traded fund, Yang and his colleagues committed insider trading by partially unwinding that position in afternoon trade without properly disclosing the original trading error.
Yang claims that the existence of a trading error doesn't qualify as inside information and that subsequent trades designed to unwind them were in line with the unit's normal hedging strategy, not an exceptional response to the mistaken orders. (Reporting by Gabriel Wildau; Editing by Jeremy Laurence)