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US one step away from delisting Chinese companies from American stock exchanges
 [American Thinker] Right now, regulations call for companies listed on U.S. stock exchanges to let the Public Company Accounting Oversight Board (PCAOB) oversee the auditing of their financial records if they want to raise money by selling stocks and bonds to the American public. This is a sound regulation rooted in investor-protection. All U.S. companies work with the PCAOB, but the Chinese ones don't.The PCAOB and Securities and Exchange Commission (SEC) have for years tried to get China to comply with the regulation but with no success. Regulators have the power to kick the Chinese companies off the exchange but have been reluctant to use the "nuclear option" of delisting. This impasse is about to be broken. This past Wednesday, the U.S. Senate unanimously passed a bill forcing Chinese companies to comply with the auditing regulation or be de-listed. The bill is called the Holding Foreign Companies Accountability Act. After passage by the Senate, the bill goes to the Democratic-run House. There, Market Watch reports that momentum is building a favorable vote. All that would be left, then, is for President Trump to sign the bill into law. Chinese companies such as Alibaba Group Holdings and Baidu have raised billions of dollars from U.S. investors. And since 1996, Chinese companies have raised $66 billion through initial public offerings. There is no earthly reason why American capital should be financing Chinese companies, especially when Chinese firms grant themselves a degree of opaqueness that hurts investors. According to the Wall Street Journal, "Luckin coffee Inc. is the latest example of a hot Chinese stock that gained a following with American investors before fraud was discovered. Nasdaq has moved to delist Luckin. which went public in 2019 and later said its employees fabricated as much as $310 million in sales." Posted by: Besoeker 2020-05-25 |
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