(Yicai Global) June 17 -- Shares in China Everbright Securities plunged over 8 percent today after the country’s securities watchdog said the Hong Kong subsidiary of the leading Chinese brokerage has been fined HKD3.8 million (USD480,000) for failing to properly monitor and prevent money laundering activities.

Everbright Securities’ Shanghai-traded stock [SHA:601788] was trading down 8.22 percent at CNY16.97 (USD2.50) as of 11:30 a.m. China time today, while its Hong Kong-listed shares [HKG:6178] dipped 0.89 percent to trade at HKD5.59 (USD0.70).

The Hong Kong unit did not “implement adequate and effective systems and controls to guard against the risk of money laundering and terrorist financing associated with third-party deposits between January 2015 and February 2017," the Securities and Futures Commission, which is also the regulatory body of Hong Kong’s stock markets, said on its website yesterday.

The Hong Kong unit has already made the necessary corrections and has implemented effective measures according to the watchdog’s requirements, China News reported yesterday, citing the parent firm’s board of directors.

Everbright Securities Hong Kong did not spot 178 deposits amounting to HKD250 million (USD31.8 million) made by a third party into a number of its accounts at a local bank, according to the watchdog’s probe into a select sample of deposits that the brokerage received over the period.

The subsidiary also failed to detect dubious deposits into some of its client’s accounts and to do the necessary follow-up work, the commission said. For instance, five clients with no apparent relationship to one another received a total of HKD5 million (USD637,000) from the same source within four days and the funds were used to buy the same stock.

Everbright Securities also suffered a major upset in April when four senior executives, including the chairman, were disciplined by the Communist Party Committee of its parent firm China Everbright Group for offences that were not made public.

Earlier this week, Everbright Securities appointed a new chairman, Zhao Ling, who had previously served as vice president of China Everbright Bank and as secretary to the bank’s board of directors.

Everbright Group is a large state-owned financial holding group set up by the Ministry of Finance and Central Huijin Investment. Everbright Securities, China Everbright Bank, Everbright Financial Holding Asset Management and China Youth Travel Group are among its subsidiaries.

Editor: Kim Taylor