Lawsuits darken Everbright's future

The Jing'an District People's Court of Shanghai Municipality, which is in charge of the district where the stock brokerage is registered, has accepted the writ. When the court holds a hearing, it will be the first time that an individual investor sues a brokerage in China.

Lawyers said that Everbright Securities has seen its reputation as a major State-owned company seriously tarnished after the China Securities Regulatory Commission specifically noted in its insider-trading finding against the company on Friday that investors could seek redress in court. The company is now an easy target for almost everyone, lawyers said.

"The court is sure to further study the case. It is still unknown whether it will accept and hear the case any time soon. But it is highly suggested that the court accepts the case to restore a sense of social justice," said Yan.

The Securities Law of China regulates that the principal should be responsible if insider trading causes any losses. However, the law lacks a detailed interpretation and regulations.

But Yan said the lack of detailed interpretation will not pose any obstacle for the court to hear the case.

"It can be seen from this case, as well as from other cases attacking monopolies, that the central government attaches great importance to social justice and the efficacy of the judicial system," he said.

In terms of compensation, Everbright Securities will have to shoulder its responsibilities. And Yan added that the China Securities Regulatory Commission should urge the company to set up a fund to compensate investors who have suffered losses as a result of the "fat finger" incident.

Everbright Securities' share price dropped 0.54 percent on Tuesday, adding to recent losses, while the benchmark Shanghai Composite Index rose 1.18 percent to close at 2,123.11 points.