What if JPMorgan’s multibillion-dollar “London whale” trading losses had led regulators to ban Jamie Dimon, chief executive, from markets for life and forbidden the bank from ever investing again in credit derivatives?

Such a draconian scenario might sound far-fetched in the US or Europe. But this is exactly the scale of the punishment that has been meted out in China against Everbright Securities, after the brokerage committed a massive trading error two weeks ago and tried to conceal it.

The Everbright scandal has received scant attention outside China – which is perhaps understandable given the closed nature of the country’s markets: few foreign institutions or investors have been directly affected by it. Yet it is an extraordinary story that merits a closer look, because it exposes the ugly underbelly of China’s brokerage industry and shows that regulators are serious about whipping it into shape.