Chinese Communist Party companies that are traded on American exchanges aren’t subject to the same investor-protection rules as their U.S. competitors, and, as a result, they have cheated Americans out of a fortune. The Senate, at the Trump administration’s urging, passed a bill to delist the rogue Chinese firms from the Stock Exchange.
The bill also boosts the oversight of these companies.
The bill, introduced more than a year ago by Sens. John Kennedy, R-La., and Chris Van Hollen, D-Md., comes as Congress and the Trump administration seek ways to punish Beijing for its initial handling of the COVID-19 pandemic, according to Fox Business.
China’s rogue companies enable fraud.
The bill, which passed on Wednesday, says that if the Public Company Accounting Oversight Board — a nonprofit established by Congress after the WorldCom and Enron scandals of the early 2000s — is denied access to a foreign stock issuer’s books for three years, the Securities and Exchange Commission will prohibit trading in the shares on U.S. exchanges.
The legislation tells all the companies in the world that “if you want to list on an American exchange, you have to submit an audit and the SEC has the right to look at that audit, and audit the audit,” Kennedy said on the Senate floor. “And if you refuse not once, not twice, but three times — if over a three-year period, each of those three years, the company says, ‘You cannot audit my audit,’ then they can no longer be listed.”
To become law, the measure titled the Holding Foreign Companies Accountable Act would still have to be approved by the Democratically-controlled House of Representatives and signed by the president.
That will be interesting since Pelosi and other Democrats constantly stand up for the Chinese Communist Party.
Fraudulent listings of Chinese companies on U.S. markets have cost investors billions of dollars over the past decade. There were 156 Chinese companies listed on U.S. Exchanges worth $1.2 trillion as of Feb. 25, 2019, according to the U.S.-China Economic and Security Review Commission.
Just this week, Luckin Coffee, the Xiamen, China-based beverage chain, received a delisting notice from Nasdaq after the company’s chief operating officer was found last month to have fabricated as much as $310 million in sales in 2019.