Panel completed and delivered report to the Financial Secretary

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The following is issued on behalf of the Panel of Inquiry on Penny Stocks Incident:

The Panel of Inquiry on the Penny Stocks Incident submitted its report to the Financial Secretary (FS), Mr Antony Leung yesterday (September 9) evening.

The Panel was appointed by the FS on July 31, 2002 to conduct an inquiry into the circumstances relating to the preparation and release of the Consultation Paper on Proposed Amendments to the Listing Rules Relating to Initial Listing and Continuing Listing Eligibility And Cancellation of Listing Procedures.

The report is lengthy (about 280 pages) and contains much background information as well as detailed narrative of what happened in the days and weeks leading up to and beyond the July 25, 2002. A series of recommendations for improvements in a number of areas are also made.

After an exhaustive inquiry over the course of some six weeks during which much documentation and some 71 submissions were considered and 11 persons interviewed, the Panel found instances of errors of judgment, systemic breakdown, mishaps and miscommunication, none of which in themselves were major shortcomings. The combination of circumstances, however, led to the unanticipated events of the July 26 and the less than favourable public response to how the matter was dealt with by the authorities thereafter.

Mr Gordon Kwong said: "We are very pleased to have completed our task on time. It has been an exhausting time for everyone. And we are very grateful for the co-operation we have received from all concerned."

Mr Robert Kotewall said: "The report is long. Much material has had to be accommodated and within a short time. We have tried to find out what happened and to make constructive suggestions for the future.

"We only ask that our report be considered on its merits and hope that lessons have been learnt so that similar incidents can be avoided in the future."

End/Tuesday, September 10, 2002

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