The South China Morning Post reported on Friday that the first known lawsuit to be lodged by a mainland brokerage against the country's securities regulator, the China Securities Regultory Commission (CSRC) has been accepted by the Beijing High Court.
In December of last year, the CSRC revoked Zhejiang Securities' proprietary trading licence, and imposed a penalty of 503.12 million yuan, the largest fine imposed on a mainland firm in recent memory. The securities watchdog accused the brokerage of illegally assisting clients in raising funds from banks for stock investments, misappropriating money from the margin accounts of customers, and proprietary trading irregularities.
According to the SCMP, Zhejiang Securities promptly responded by issuing a lawsuit, accusing the CSRC of violating procedural rules, factual errors and the misinterpretation of regulations.
According to investment experts in the region, the brokerage's decision to sue the CSRC would have been unusual, but for the severity of the punishment imposed upon it.
One analyst told the newspaper on Friday that the penalties seemed 'intended to break Zhejiang Securities.' He added that: 'Zhejiang Securities would face its demise without this suit.'
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