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The Government today (May 20) published in the Gazette the Pyramid Schemes Prohibition Bill, which seeks to combat pyramid schemes more effectively.
A spokesman for the Commerce and Economic Development Bureau said that the current provisions of the Pyramid Selling Prohibition Ordinance (Cap. 355), particularly its definition of "pyramid selling scheme", are no longer effective in combating objectionable schemes that adopt a pyramid structure in various guises.
"We have reviewed the current regulatory approach and the effectiveness and operation of the Ordinance, having regard to regulatory regimes in other jurisdictions and relevant judgments of the Court.
"From December 2010 to January 2011, we consulted the public on a package of legislative proposals aimed at eradicating pyramid schemes. We have also consulted the Legislative Council Panel on Economic Development. The community generally supports the legislative proposals," the spokesman added.
The bill implements the legislative proposals. Its main provisions are as follows:
(a) For a clearer definition, it is proposed to define "pyramid scheme" as a scheme in which new participants must make a payment (or other consideration) to other participants and/or establishers and that such a payment or consideration is entirely or substantially induced by the prospect held out to the new participants that they will be entitled to a benefit (financial or otherwise) which is entirely or substantially derived from the introduction of further new participants, irrespective of whether the scheme involves the marketing of goods or services;
(b) to curb the expansion of pyramid schemes, it is proposed that any participants who induce or attempt to induce other persons to participate in a pyramid scheme, with the knowledge that the benefits they may get from joining the scheme are entirely or substantially derived from the introduction of further new participants, should be held criminally liable; and
(c) the maximum penalty should be increased from a fine of $100,000 and imprisonment for three years under the current Ordinance to a fine of $1 million and imprisonment for seven years.
The bill will be introduced into the Legislative Council on June 1.
Ends/Friday, May 20, 2011
Issued at HKT 12:01
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