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Foreign exchange trade waits for legal changes

The Young Reporter (1994, March 24), 26(05), pp. 1, 7.
Author: Enoch Wong.
Permanent URL - https://sys01.lib.hkbu.edu.hk/bujspa/purl.php?&did=bujspa0002004

By ENOCH WONG

A DELAY in enacting an ordinance to control the foreign exchange trade leaves a loophole for some foreign exchange companies to take advantage of their own salesmen, according to a spokesman of the Hongkong Federation of Trade Unions.

Mr Wong Kwok-hing, spokesman for the Federation, said 21 investors and agents had complained about fraud and malpractice by foreign exchange companies, involving $1 billion dollars, in 1993.

“The situation is far more serious than the figure revealed,” he said.

The ordinance, which is intended to strengthen the supervision of foreign exchange companies, will not be enacted until the coming summer.

However, Mr Wong said the period before the implementation of the ordinance offered an opportunity for some foreign exchange companies to cheat their sales staff.

“Some foreign exchange companies use attractive benefits like high salary and few working hours to lure people who are inexperienced in the foreign exchange trade,” he said.

Mr Wong said laymen like new immigrants, housewives and students were the main targets of these foreign exchange companies to be salesmen. And they would ask these naive salesmen to pay several thousand dollars to open accounts in their own companies.

“The salesmen are usually persuaded to sign an agreement so that their company can make transactions freely for them,” Mr Wong said.

Some salesmen were told that the capital in their accounts was totally lost after a certain period of time, and they would be fired immediately by the foreign exchange companies, without any salary,” he said.

A new immigrant, who did not want his name disclosed, said he was cheated by a foreign exchange company.

He was asked to open an account for investment. He had signed a blank form with a vague explanation; afterwards, the company made investments for him without telling him in advance.

“After I was informed that I had lost $25,000, I was fired without getting any salary,” he said.

Later, he found he had signed a warrant which stated that the company could do anything with his capital without any agreement from him.

Another victim, Mrs Cheung, said she had had a bad experience last year.

She was a housewife and was employed as an account executive in a foreign exchange company.

She was told that she could earn lots of money by opening an investment account in the company.

“I know nothing about foreign exchange and I lost $8,000 finally,” Mrs Cheung said.

Mr Wong said many victims were not allowed to read warrants before they signed their names.

“Some of them might lose all their money in a night because they were misled or they carelessly gave their authority to foreign exchange companies, to make transactions for them,” he said.

Mr Samson Chan Wing-kin, account executive of a prominent foreign exchange company, said it was common for some small-scale companies to deceive their salesmen into opening investment accounts.

“Sometimes, the salesmen may lose all the money in their accounts and be fired without salary,” he said.

“According to my company practices, I still get salary even I did not find new customers in the previous three months,” Mr Chan said.

Mr Wong said the government should remind people to be careful when they wanted to get a job in the foreign exchange trade.

Mr Patrick Leung, senior manager of Public Affairs and Policy of the Securities and Futures Commission, said promotion advertisements reminding people to be careful when they invest had been aired.

Mr Leung explained that the implementation of the ordinance had been delayed because of time needed for drafting and consultation.

“The ordinance was submitted to the Legislative Council in July last year. But the ordinance was not examined by the Council until October because of the summer vacation,” he said.

He said the ordinance would possibly be executed in the coming July.

Mr Wong urged the government to set up a committee responsible for dealing with the cheating complaints on foreign exchange trade.

By the time being, he suggested that announcing those foreign exchange companies’ names through the Consumer Council could be a warning for them before the enacting of the ordinance.

However, Mr Leung disagreed with this kind of warning. “According to the Hongkong law spirit, everyone is presumed innocent unless you have enough evidence to charge them.”

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