Lawsuits darken Everbright's future

With a spate of lawsuits looming, Everbright Securities' prospects look anything but bright.

An investor in Shanghai has filed a 100,000 yuan ($16,330) claim against the beleaguered stock brokerage. The investor's lawyer, Yan Yiming, said the amount may be small, but the case is groundbreaking because it has the potential to heighten the investors' sense of justice.

Also, an investor in Guangzhou has filed a 70,000 yuan claim. The lawyer representing the investor, Ye Xiaolei, was quoted by a local newspaper as saying that the lawsuit was prompted by losses caused by Everbright Securities' inadequate trading system and its executives' false statements following a trading error.

Separately, a group of 30 investors from East China's Fujian province are also mulling a class action. The highest claim made by a single investor in the group amounts to 300,000 yuan.

Stock market observers said they expect the lawsuits to set off an avalanche of litigation cases that could take years to unwind.

Everbright Securities is facing claims estimated at 2.7 billion yuan by investors alleged to have been misled by the company's deliberate withholding of information about its 7.2 billion yuan trading error.

"Investors have sensed blood and they all want their bite," said Yan Yiming, founder of Yan Yinming Law Firm, which has a reputation among lawyers for the defense of investors' rights.

According to a writ filed on behalf of a 60-year-old retired worker in Shanghai, the plaintiff bought an unspecified amount of stocks because he alleged that he was misled by Everbright Securities' denial of a mistaken order placed on 11:05 am on Aug 16. The stock brokerage did not issue a statement of clarification until 2:45 pm.

"Anyone who invested in stocks or stock index futures during that time frame can claim indemnity," Yan said.