A BEIJING court said Friday it has rejected a lawsuit filed against China’s securities regulator by a former executive of domestic brokerage Everbright Securities after he was fined and penalized for insider trading.

    In February, Yang Jianbo, former general manager of a high-frequency trading unit at Everbright Securities, sued the China Securities Regulatory Commission (CSRC), challenging the lifetime ban from the industry and 600,000 yuan (US$99,000) fine that the regulator imposed on him in November 2013 in a case related to a huge trading error by the brokerage.

    Yang had argued that the regulator had overstepped its authority and that the trading error didn’t constitute insider trading.

    Everbright Securities on Aug. 16, 2013 placed accidental buy orders for billions of yuan worth of exchange-traded funds, resulting in inflated orders totaling 23.4 billion yuan, according to the regulator. Some 7.27 billion yuan of those trades went through, it said.

    The brokerage then tried to reverse the trades without making a public statement on its original trading error.

    Everbright Securities was fined 523 million yuan by the securities regulator for insider trading and giving misleading information after the trading error.

    In one of its toughest enforcement actions ever, China’s securities regulator fined Everbright Securities 523.29 million yuan and banned the firm from proprietary trading in stocks and derivatives.

    The Beijing First Intermediate Court ruled against Yang, according to a statement on the court’s Twitter-like Weibo microblog account, the court’s official messaging service.

    Yang’s suit argued that existence of a trading error did not constitute insider information and that subsequent trades designed to unwind it were in line with the unit’s normal hedging strategy.

    The court said if a party is dissatisfied with the decision, it may have the decision reviewed in the Beijing High People’s Court. Yang was quoted by domestic media as saying that he expected to appeal the court’s decision. (SD-Agencies)