Beijing First Intermediate People's Court accepted and registered on Tuesday a case in which Yang Jianbo, former general manager of the strategy department of Everbright Securities Co Ltd, filed a suit against the Chinese securities watchdog.

The court agreed to accept the lawsuit filed against the China Securities Regulatory Commission by Yang, former head of a trading unit at the Chinese brokerage, who is contesting the punishment he received for alleged insider trading.

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Yang and three colleagues were banned for life from the securities industry and fined 600,000 yuan ($99,000) each by the commission in August after an investigation determined they had committed insider trading.

Yang's lawyer, Li Jiang, a partner at the Beijing-based Zhong Zhao Law Firm, submitted a complaint to Beijing First Intermediate Court on Feb 8.

The commission found that after a computer malfunction during morning trade on Aug 16, which caused Everbright to take a 7.27 billion yuan long position on a commonly traded exchange-traded fund, Yang and his colleagues committed insider trading by partially unwinding that position in afternoon trade without properly disclosing the original trading error.

Yang claims the existence of a trading error doesn't qualify as inside information and that subsequent trades designed to unwind them were in line with the unit's normal hedging strategy, not an exceptional response to the mistaken orders.

In a regular meeting held last Friday, Zhang Xiaojun, a commission spokesman, said it had released its explanation about the Everbright Securities' case in two news conferences in August and November last year and there had been no further updates.

According to legal proceedings, a copy of the bill of complaint will be sent to the defendant - the commission - within five days after the court accepted the case. After that, the commission should provide its defense to the court within 10 days. The court will then send a copy of the bill of defense to the plaintiff within five days. The court should make its first trial decision within three months as soon as the case is registered.

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