TNAG-1943-FCO40-2769-Stock-market-and-exchange-rate-in-Hong-Kong-1989 — Page 312

6.

4

Investigations

The purpose of an investigation is different in character from that of an inspection. While the latter is in the nature of а spot check, an investigation will be conducted only if it appears that some breach of the Ordinances or rules may have been committed, some other infringement of law may have occurred, insider dealing may have taken place, or it is otherwise in the interest of the investing public to make an investigation. The grounds for an investigation and the powers of the investigators are similar to those in Sections 124 and 127 of the Securities Ordinance. It is necessary to include detailed provisions in the Bill because neither the Commodities Trading Ordinance nor the Protection of Investors Ordinance has any investigative provisions.

The Commission can appoint either its own officers or, with the Financial Secretary's consent, other competent persons to conduct an investigation, and to report. The expenses of investigators, other than officers of the Commission, will be paid for out of the public purse, and consideration is being given to the question of the recoverability of those expenses by parties found to be at fault.

Legal safeguards and protection similar to those which already exist under the Securities Ordinance will be maintained in the present Bill. No lawyer or other adviser will be required to disclose any information which he would be entitled to withhold in all proceedings on the ground of legal professional privilege. No banker will be required to disclose information, unless the investigators have grounds for believing that the information is relevant, and the Commission certifies in writing that the disclosure is necessary. Finally, and this is a point which has been much discussed, a person who is being asked questions is not excused from answering on the ground that his answer may tend to incriminate him, but that answer cannot be used in subsequent criminal proceedings. This is the solution to a difficult problem which has already been enacted by section 127(8) of the Securities Ordinance and section 145 (3A) of the

the Companies Ordinance. As in the case of those earlier statutory provisions, it is felt that it is of overriding importance to obtain the information necessary for the protection of investors, while, on the other hand, that information should not afterwards be used in criminal proceedings against him.

If a registered person refuses to make information available either during an inspection, or during an investigation, the officer conducting the inspection or investigation may certify the refusal to the High Court, thus leaving it to the judiciary to decide whether in the particular circumstances the refusal was justified or not.

Again, in the case of an investigation if a person refuses to make his records available or to co-operate with the investigator, the Commission may apply for a magistrate's warrant so as to ensure that the investigation is not further

obstructed.

These substantial legal protections should allay fears which have been expressed that the powers of the Commission are insufficiently controlled by

the rule of law.