Legislators inviting comments on penny stocks

PUBLISHED : Thursday, 17 October, 2002, 12:00am
UPDATED : Thursday, 17 October, 2002, 12:00am

Legislators have invited the public to give their views on the penny-stock panel's report, while Hong Kong Exchanges and Clearing (HKEx) has decided to follow many of its recommendations.

In a rare move, the Legislative Council financial affairs panel yesterday issued a statement on a government Web site inviting individuals or organisations to express their views.

The legislators said the exercise would help lawmakers determine how to 'further deliberate on the penny-stocks incident'.

The panel believes collecting public views might help them decide if another review into the incident should be held after a government-appointed panel delivered its report last month.

The two-man panel - made up of accountant Gordon Kwong Chi-keung and barrister Robert Kotewall - investigated why investors dumped more than 200 penny stocks on July 26, a day after the HKEx released a consultation paper suggesting criteria to delist low-priced stocks.

Some legislators were not happy with the findings in the panel's report as it did not blame any officials or call for anyone to face penalties.

HKEx chief executive Kwong Ki-chi said he personally did not accept some of the report's findings as it was harsher on the exchange than on the Securities and Futures Commission (SFC), even though both bodies were involved in preparing the delisting paper.

Public submissions on the report can be made up to October 30, and respondents can indicate whether they wish to make oral representations at the Legco panel's meetings.

The submissions will be released on the Legco Web site unless advised otherwise.

Meanwhile, the HKEx board of directors yesterday held a meeting to discuss the penny-stock report and decided to follow many of its recommendations.

A source told the South China Morning Post that the board would adopt the recommendation to divide the consultation process into two parts - to consult market participants when it was preparing papers and then release a detailed paper for public consultation.

The source also said the revised delisting paper, which will be issued at the end of this month, was close to being completed and the exchange would soon pass a draft to the SFC.

The HKEx meeting did not discuss the details of the paper, but the source said the exchange would certainly not include the controversial 50 HK cents delisting threshold.

It could either reduce it to 10 HK cents or simply not use a company's share price as a delisting criterion, he said.

The four brokers' industry bodies have all warned the exchange would risk another fiasco if it used share prices to delist companies.