XN000022-1989-04-12 — Page 38

WEDNESDAY, APRIL 12, 1989

36

"GAPING HOLE" IN SFC BILL

MEMBERS OF A LEGISLATIVE COUNCIL AD HOC GROUP HAD TO WORK THEIR HEARTS OUT IN STUDYING THE SECURITIES AND FUTURES COMMISSION BILL 1989 BUT REGRETTABLY THE FINAL PRODUCT STILL HAD A GAPING HOLE IN IT, THE HON MARTIN LEE SAID TODAY (WEDNESDAY),

RESERVATIONS THAT HE

SUPPORTED

FOR THIS REASON, IT WAS WITH THE BILL, HE TOLD THE LEGISLATIVE COUNCIL.

NOT

THE TO

BE AN

THE GAPING HOLE HE REFERRED TO WAS THAT CLAUSE 4(1)(C) DID

SECURITIES AND REQUIRE THE

FUTURES COMMISSION TO

ΤΟ REPORT FINANCIAL SECRETARY THE OCCURRENCE

ANY DEALING IN RELATION FUTURES CONTRACTS WHICH IT REASONABLY BELIEVED OR SUSPECTED TO INSIDER DEALING.

OF

MR LEE SAID HE HAD SHOWN THE BILL TO AN EMINENT QUEEN'S

AND POINTED OUT TO COUNSEL WHO SPECIALISED IN COMPANY LAW,

THE OMISSION; AND THE COMMENT WAS: "SURELY THIS IS AN OVERSIGHT"

HIM

MR LEE SAID THIS WAS ALSO HIS IMMEDIATE REACTION WHEN THE AD HOC GROUP DISCOVERED THIS OMISSION AT ITS MEETING.

BUT WHEN THE POINT WAS RAISED WITH THE ADMINISTRATION, TRANSPIRED THAT IT WAS A DELIBERATE OMISSION, QUITE A FEW WERE ADVANCED, BUT NONE CONVINCING. HE SAID.

IT

SOON REASONS

"INDEED, ONE IS AT A LOSS TO UNDERSTAND WHY ONE IS NOT PUSHING AN OPEN DOOR IN THIS MATTER, SINCE ONE IS MERELY REMINDING THE COMMISSION TO ARM ITSELF WITH A POWER WHICH ON ANY VIEW IT SHOULD POSSESS," HE SAID.

HE NOTED THAT THE ADMINISTRATION HAD PUT FORWARD A PAPER SETTING OUT FIVE REASONS WHY A CONGRESSIONAL COMMITTEE OF THE UNITED

HAD DECIDED STATES CONGRESS

IN 1984 NOT TO AMEND THE LAW BY PROHIBITING INSIDER DEALING IN FUTURES CONTRACTS IN THE COUNTRY.

THE FIRST TWO REASONS GIVEN WERE CLEARLY THE MOST IMPORTANT, HE SAID. THE FIRST WAS THAT "FUTURES TRANSACTIONS DO NOT GIVE RISE ΤΟ FIDUCIARY DUTIES WHICH CORRESPOND TO THOSE WHICH A SECURITIES INSIDER OWES TO THE COMPANY WHOSE SHARES ARE CONCERNED, AND PURCHASERS OR SELLERS OF THOSE SHARES.

"

"THE SECOND REASON WAS THAT "INSIDE INFORMATION ABOUT FUTURES MARKET DOES NOT GENERALLY RELATE TO INDIVIDUAL COMPANIES."

UNITED

"BUT HONG KONG'S LAWS WERE DIFFERENT FROM THOSE OF THE

REASON STATES, AND THE FIRST

GIVEN BY THE ADMINISTRATION HAD NO RELEVANCE TO HONG KONG, HE SAID.

/AS TO