Everbright Securities sees 2013 profit down due to Aug glitch

Everbright Securities Co Thursday said that its profit in 2013 is expected to drop sharply due to losses incurred from a trading glitch in August, according to a filing on the Shanghai Stock Exchange Thursday.

The company expects its 2013 net profit to drop 78.79 percent year-on-year to 212.7 million yuan ($35.2 million), and its revenue to increase 11.33 percent year-on-year to 4.06 billion yuan in 2013, according to the filing.

The company also said Thursday that it will issue up to 10 billion yuan worth of subordinated debt to add cash flow to the company, and will name Xue Feng, the company's former vice president, its new president.

Due to a trading error on August 16, the company sold some of its securities assets, which also resulted in losses in investment returns, the company said in the filing on Thursday.

During morning trading on August 16, a trade error caused by Everbright Securities' arbitrage system placed a buy order for more than 20 billion yuan of shares, which resulted in transactions worth 7.2 billion yuan.

The huge buy order of the company caused the Shanghai Composite Index to surge nearly 6 percent within minutes and then slump back to its previous level.

Shortly after the trading error during the day, the company sold 1.85 billion yuan worth of stocks as exchange-traded funds (ETF) and short sold 7,130 futures contracts, in hopes to offset losses.

In November, China Securities Regulatory Commission fined Everbright Securities a record 523 million yuan for the trading error and the company's "insider trading" behavior after the error.

Four senior executives of the company, including the then-president Xu Haoming, who resigned after the August trading error, were barred from the stock market for life, and each of the executives was fined 600,000 yuan by the securities authority.