Many economists have expounded on the view that deregulation, or the lifting of government control, is essential to financial reform. But their often repeated argument that too much control is strangling innovation has become a tiring clich that is anything but innovative.

The Everbright Securities' debacle has forcefully demonstrated that deregulation is more like a poison than an elixir for an immature market where intermediaries and investors, both institutional and retail, believe that they can get away with virtually anything to make a fast buck. Otherwise, how could Everbright be so crass and cavalier in weaving a web of lies to cover potential losses caused by an honest mistake?

It was good that the misdeeds of this wayward stock brokerage, one of the largest in China, were exposed although many angry investors believe that the penalties meted out by China Securities Regulatory Commission were too lenient to have much of a deterrent effect. But this case, together with the bank credit squeeze in June, serves as a stark reminder that the mainland financial markets are not ready for deregulation anytime soon.