XN000022-1974-05-04 — Page 2

SATURDAY, MAY 4, 1974

LAW ON IMPROPER STUCK TRADING PRACTICES EFFECTIVE ON MONDAY

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PART XII OF THE SECURITIES ORDINANCE WHICH DEALS WITH THE PREVENTION OF IMPROPER TRADING PRACTICES COMES INTO EFFECT UN MONDAY (MAY O).

HOWEVER, SECTION 140 OF THIS PART WHICH RELATES TO INSIDER TRADING IS NOT TO BECOME EFFECTIVE UNTIL A LATER DATE.

THIS PART OF THE ORDINANCE, PASSED IN THE LEGISLATIVE COUNCIL LAST FEBRUARY, MAKES IT AN OFFENCE FOR ANYONE TO CREATE A FALSE UR MISLEADING APPEARANCE OF ACTIVE TRADING IN SECURITIES UR A FALSE MARKET IN SECURITIES.

UNDER CLAUSE 135 OF THE ORDINANCE, A FALSE MARKET IS CREATED IN RELATION TO SECURITIES WHEN THE MARKET PRICE OF THOSE SECURITIES IS RAISED OR DEPRESSED OR PEGGED OR STABILISED BY MEANS OF :-

(A) SALES AND PURCHASES TRANSACTED BY PERSONS ACTING IN

COLLABORATION WITH EACH OTHER FOR THE PURPOSE OF SECURING A MARKET PRICE FOR THOSE SECURITIES THAT IS NOT.JUSTIFIED EITHER BY THE ASSETS OF THE CORPORATION WHICH ISSUED THE SECURITIES OR BY THE PROFITS CINCLUDING ANTICIPATED PROFITS OF THE CORPORATION=

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(B) ANY ACT WHICH HAS THE EFFECT OF PREVENTING OR INHIBITING

THE FREE MEGOTIATION OR MARKET PRICES FOR THE PURCHASE OR SALE OF THE SECURITIES= ÜR

(C)

THE EMPLOYMENT OF ANY FICTITIOUS TRANSACTION OR DEVICE OR ANY OTHER FORM OF DECEPTION OR CONTRIVANCE.

THE MAXIMUM PENALTY FOR CREATING A FALSE MARKET IN SECURITIES OR +FIXING+ PRICES FOR SECURITIES IS A FINE OF $50,000 AND TWO YEARS' IMPRISONMENT.

PARTS 1 AND 11 OF THE ORDINANCE BECAME EFFECTIVE ON MARCH 1.

PART 111 RELATING TO STUCK EXCHANGES AND PART IV TO THE ESTABLISHMENT OF A KUNG KÔNG FEDERATION OF STOCK EXCHANGES, ARE TU BE EFFECTIVE FROM JUNE 1, THIS YEAR.

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