Everbright Faces Further Sanctions Over Shanghai Crash

Everbright Faces Further Sanctions Over Shanghai Crash
By U.S. Government [Public domain], via Wikimedia Commons

Everbright Faces Further Sanctions Over Shanghai Crash

Everbright Securities Co Ltd (SHA:601788), the Chinese brokerage house responsible for the inverted Flash Crash last week, continues to struggle as a government crackdown persists. After sending an erroneous multi-billion dollar buy order to the market last week, the firm accidentally mispriced a 10 billion yuan sale in government bonds yesterday. Since then the firm has been “suspended” and its shares in Shanghai yesterday traded the full 10% down allowed by law.

All signs are pointing to a swift and harsh punishment doled out by authorities for Everbright’s sloppy business practices. Market confidence has been a plaguing issue in mainland China as over 2 million trading accounts have been closed and the Shanghai Composite has dropped over 40% since 2009.

Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information

Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

“It wouldn’t be surprising, as market participants and investors eagerly await, if the regulators hand down a harsh penalty and hefty fines to ensure that similar incidents will not happen again,” said Hubert Tse, a Shanghai-based partner at the law firm Boss & Young who’s not involved in the case.

In addition to fines and a tarnished image, Everbright also faces a potential loss of 300-400 million yuan from the erroneous buy orders that were executed.

Updated on

No posts to display