XN000022-1983-01-28 — Page 3

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FRIDAY, JANUARY 28, 1983

MORE PROTECTION PLANNED FOR PAPER GOLD INVESTORS

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THE GOVERNMENT IS PROPOSING TO PROVIDE GREATER PROTECTION TO MEMBERS OF THE PUBLIC WHO MAY BE LURED BY INVESTMENT SCHEMES WHICH FALL OUTSIDE THE SCOPE OF THE EXISTING PROTECTION OF INVESTORS ORDINANCE.

IF THE PROPOSAL TO AMEND THE ORDINANCE IS ACCEPTED BY THE LEGISLATIVE COUNCIL, THE GOVERNMENT INTENDS TO CONTROL THE MARKETING AND ADVERTISING OF PAPER GOLD SCHEMES WHICH ALLOW BUYERS TO DEFER TAKING DELIVERY OF GOLD COINS OR GOLD BULLION AND SELL BACK THE GOLD.

A GOVERNMENT SPOKESMAN SAID TODAY THAT VARIOUS TYPES OF GOLD TRANSACTIONS ARE AVAILABLE AT PRESENT WHICH PROVIDE DIRECT SALE, STORAGE, GOLD CERTIFICATE OR GOLD ACCUMULATION SERVICES.

THOSE BUYING FROM DEALERS WHO ARE SUBJECT TO PRUDENTIAL SUPERVISION, SUCH AS THE BANKS, ARE WELL PROTECTED IN THEIR INVESTMENT, BUT THERE IS NO WAY TO KNOW FOR CERTAIN THAT OTHER DEALERS ARË KEEPING ADEQUATE STOCKS OF GOLD OR ARE MAINTAINING SUFFICIENT LIQUIDITY TO MEET THEIR LIABILITY.

THE DECISION TO PROVIDE PROTECTION TO BUYERS OF PAPER GOLD IS TAKEN AFTER THE GOVERNMENT HAS CAREFULLY CONSIDERED THE JUSTIFICATIONS FOR INTERVENTION IN THIS PARTICULAR CONSUMER MARKET, THE SPOKESMAN SAID.

HE EMPHASISED THAT NORMAL GOLD TRADING, INCLUDING SPOT TRADING IN GOLD BULLION AND COINS AND GOLD ORNAMENT BUSINESS, WILL NOT BE AFFECTED BY THE PROPOSED LEGISLATION, WHICH HAS BEEN WELCOMED BY THE CHINESE GOLD AND SILVER EXCHANGE SOCIETY AND THE HONG KONG AND KOWLOON JEWELLERS' AND GOLDSMITHS' ASSOCIATIONS.

UNDER THE PROTECTION OF INVESTORS (AMENDMENT) BILL 1983 PUBLISHED TODAY, THE MEANING OF + INVESTMENT ARRANGEMENTS+ IS WIDENED AND THE GOVERNOR IN COUNCIL WILL BY ORDER BE ABLE TO SPECIFY, WITHIN THE LIMITS SET OUT IN THE BILL, WHICH INVESTMENT ARRANGEMENTS ARE CAUGHT BY THE PRINCIPAL ORDINANCE. A PROTECTION OF INVESTORS (GOLD PURCHASE) ORDER HAS BEEN APPROVED IN PRINCIPLE AND WILL BE MADE IF THE BILL IS PASSED INTO LAW.

ANYONE WHO WISHES TO ADVERTISE OR INVITE THE PUBLIC TO TAKE PART IN SUCH INVESTMENT ARRANGEMENTS WILL BE REQUIRED TO OBTAIN THE PRIOR PERMISSION OF THE SECURITIES COMMISSION, UNLESS EXEMPTED UNDER THE PROVISIONS OF THE ORDINANCE. THE EXISTING MAXIMUM PENALTY FOR FAILING TO OBTAIN THAT PERMISSION IS A FINE OF $500 000 AND THREE YEARS' IMPRISONMENT.

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