XN000022-1978-01-25 — Page 3

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WEDNESDAY, JANUARY 25, 1978

BILL TO CURB INSIDER TRADING PASSED

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A BILL TO EMPOWER THE GOVERNMENT TO DEAL WITH INSIDER DEAL ING IN HONG KONG WAS PASSED WITH A NUMBER OF AMENDMENTS IN THE LEGISLATIVE COUNCIL TODAY.

THE AMENDMENTS TO THE SECURITIES (AMENDMENT) BILL 1977, WHICH WERE GENERALLY AGREED IN PRINCIPLE BY THE AD HOC GROUP FORMED BY THE UNOFFICIALS TO STUDY THE BILL, INCLUDE:

* THE COMMISSIONER FOR SECURITIES SHOULD NOT BE EMPOWERED

TO TAKE POSSESSION OF BOOKS AND DOCUMENTS OF THE COMPANY CONCERNED FOR MORE THAN 48 HOURS=

*

A PERSON FOUND NOT CULPABLE BY THE INSIDER DEAL ING TRIBUNAL MAY ASK TO HAVE HIS NAME LEFT OUT OF THE TRIBUNAL'S REPORT AND

* THE WORDS IS CULPABLE' WERE CHANGED TO 'MAY BE

CULPABLE' IN A NEW SECTION OF THE BILL.

SPEAKING AT THE SECOND READING OF THE BILL, THE HON. SIR S.Y. CHUNG SAID THE UNOFFICIALS BELIEVED THAT ONLY TIME WOULD TELL WHETHER THE AMENDING LEGISLATION WOULD PROVE EFFECTIVE AND THEREFORE WELCOMED THE GOVERNMENT'S INTENTION TO ASSESS THE POSITION IN 1980.

HE TOLD THE COUNCIL THAT THE AD HOC GROUP OF UNOFFICIALS HAD ADOPTED A CAUTIOUS APPROACH, NOT ONLY BECAUSE OF DIFFICULTIES EXPERIENCED ELSEWHERE IN TACKLING THE PROBLEM, BUT ALSO BECAUSE OF CONTRARY VIEWS EXPRESSED LOCALLY THAT THE PROPOSED LEGISLATION EITHER WENT TOO FAR OR DID NOT GO FAR ENOUGH.

THE GROUP HAD A SERIES OF MEETINGS WITH THE ATTORNEY GENERAL AND OTHER SENIOR GOVERNMENT OFFICIALS DURING WHICH A NUMBER OF AMENDMENTS TO THE ORIGINAL BILL WERE REACHED,

DURING THE DISCUSSIONS, MEMBERS OF THE AD HOC GROUP ALSO EXPRESSED CONCERN ABOUT UNREPORTED +CURBSIDE DEALS+ WHICH WERE REQUIRED BY THE RULES OF THE STOCK EXCHANGES TO BE REPORTED.

THEY ALSO POINTED OUT THAT INSIDER DEALINGS COULD STILL BE ARRANGED EITHER THROUGH THE USE OF NOMINEES OUTSIDE HONG KONG, OR THROUGH DEALINGS IN HONG KONG SHARES LISTED OR TRADED ON THE LONDON STOCK EXCHANGE, SO THAT UNLESS THESE TWO LOOPHOLES WERE PLUGGED, THE BILL WOULD AT BEST CATCH +SMALL AND NOT BIG FISH+.

IN REPLY. THE FINANCIAL SECRETARY. THE HON. PHILIP HADDON-CAVE THANKED THE AD HOC GROUP FOR THE IR THOROUGH STUDY AND SHARED ITS CONCERN ON THE METHODS BY WHICH INSIDERS MIGHT BE ABLE TO CONCEAL THEIR TRANSACTIONS.

/AS REGARDS