Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

US securities regulator pushes plan that could delist Chinese firms

US securities regulator pushes plan that could delist Chinese firms

The Securities and Exchange Commission intends to propose a regulation that would lead to the delisting of companies for not complying with US auditing rules.

The US securities regulator is pushing ahead with a plan that would require US-listed Chinese companies to use auditors overseen by the US or face delisting from US stock exchanges.

The proposal by the Securities and Exchange Commission (SEC) is likely to be open to public comment in December, according to The Wall Street Journal.

The regulation is part of a concerted effort to get tough on China as the Trump administration winds down in the coming weeks to mark its legacy on China issues and make certain policies difficult for the incoming Biden administration to unwind.

This is the second move since the November 3 presidential election by the Trump administration to cut Chinese companies off of US capital markets. Last week, Trump signed an executive order prohibiting Americans from investing in Chinese firms that are deemed linked to the Chinese military.

Agency officials have been working to draft the proposal since August, urged by the President’s Working Group on Financial Markets – a group that includes the SEC Chairman Jay Clayton and Treasury Secretary Steven Mnuchin.

To push the regulation forward now, however, is unusual because agencies typically stop issuing major new policies after a presidential election.

The new regulation would force Chinese companies that have shares traded on American stock exchanges such as the New York Stock Exchange and Nasdaq to comply with auditing regulations like any other listed company.

The regulation will depend on the exchanges to execute it by delisting companies that fail to maintain compliance with the rules and bar companies from going public.

SEC chairman Jay Clayton, who announced plans to step down by the end of the year, will be gone before any regulation is finalised. That would leave completing it to an SEC chief picked by President-elect Joe Biden.

The NYSE declined to comment. The SEC and the Nasdaq did not immediately respond to requests seeking comment.

US auditing supervisor, the Public Company Accounting Oversight Board, has been battling against China for decades over its resistance to hand over publicly-traded companies’ audits for inspection. Beijing has refused to comply citing state secret laws.

The White House and Congress have ratcheted up efforts to crack down on the disparity in treatment of Chinese companies traded in the US, saying US investors are exposed to unknown and outsize risks because of the lack of transparency.

More than 210 Chinese firms with a combined market capitalisation of about US$2.2 trillion are listed on major US stock exchanges as of October, according to the most recent congressional report by the US-China Economic and Security Review Commission.

“The People’s Republic of China (PRC) is increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses,” said US President Donald Trump in the executive order last week.

US regulator said in 2018 that among 224 listed companies on American stock exchanges that it has problem inspecting, 213 were Chinese companies.
In April, Luckin Coffee was caught in the midst of an accounting scandal. Less than a year after the Chinese rival to Starbucks went public on the Nasdaq, it was found to have fabricated as much as US$310 million in sales.

In May, the Senate unanimously passed legislation – the Holding Foreign Companies Accountable Act – that would delist companies for failing to comply with the auditing rules for three straight years.

“All the rest of us want is for China to play by the rules,” Senator John Kennedy, the Louisiana Republican who wrote the pending legislation, said earlier in the year.


The new regulation would force Chinese companies that have shares traded on American stock exchanges such as the New York Stock Exchange and Nasdaq to comply with auditing regulations like any other listed company.


The President’s Working Group report that is driving SEC action recommended that exchanges establish enhanced standards to prevent the listing of companies that do not comply with US rules.

The report said the rules should not take effect until January 2022 to prevent market disruptions.

The Chinese securities regulator said in May that the US was politicising securities regulations, saying China had assisted in an investigation of a Chinese accounting firm in 2017.

The SEC and the stock exchanges have acknowledged the long-standing problems with publicly traded Chinese companies, but they cautioned that cracking down on Chinese listings could lead to an exodus of these firms that accounted for hefty listings fees and revenue.

They have been advocating for a market-driven approach instead that could include heavier oversight of US arms of auditing firms such as Deloitte, PwC, Ernst & Young and KPMG, requiring them to provide collateral for audit failures of their Chinese affiliates in the form of financial guarantees.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×