Chinese brokerage Everbright Securities faced tough sanctions from regulators as it apologized for a glitch in its computer systems that caused a spike of more than 5 percent in domestic stock indexes last week.
The country's securities regulator said on Sunday it would launch a formal investigation into Everbright, which said it incurred losses of 194 million yuan ($31.7 million) as a result of the error last Friday.
Everbright said on its website it faced "warning or punishment by regulators, possibly impacting its business expansion and operational performance."
(Read more: Goldman slashes target for China stocks)
"This incident brought negative impact to the company's brand reputation and market image," Everbright said.
As a result of the glitch, Everbright placed unintended buy orders totaling 23.4 billion yuan, of which 7.27 billion yuan was actually traded, a spokesman for the China Securities Regulatory Commission said in a statement on CSRC's website.
"Based on the results of the investigation, CSRC will seriously deal (with Everbright Securities) in accordance with the law and make an announcement to the public in a timely manner," a CSRC spokesman said.