U.S. Secretary of State Mike Pompeo on June 4 applauded a move by Nasdaq to tighten listing rules for Chinese companies amid growing calls for U.S.-listed Chinese firms to be subject to the same accounting standards as American businesses.
“American investors should not be subjected to hidden and undue risks associated with companies that do not abide by the same rules as U.S. firms,” Pompeo said in a statement.
Nasdaq recently proposed new restrictions on initial public offerings that, if approved by the U.S. Securities and Exchange Commission (SEC), would make it harder for some Chinese companies to debut on the stock exchange.
The new rules include greater scrutiny of the audit firms that examine overseas companies it lists. Beijing currently prevents the SEC and its accounting oversight arm, the Public Company Accounting Oversight Board, from inspecting audits of Chinese companies, citing “state secrecy.”
Pompeo said the action was “particularly important given a pattern of fraudulent accounting practices in China-based companies.” He added that Nasdaq’s effort should serve as a model for all other exchanges around the world.
Nasdaq in May moved to delist Luckin Coffee, after the Chinese beverage brand discovered that its senior managers had falsified 2019 sales by about $310 million.
President Donald Trump on May 29 announced that a presidential working group on financial markets would be looking into the “differing practices of Chinese companies listed on the U.S. financial markets, with the goal of protecting American investors.”
The announcement was part of a series of measures to address threats posed by Beijing, including the revocation of Hong Kong’s special trading status with the United States, following Beijing’s recent move to tighten its grip on Hong Kong by imposing a national security law for the city.
In May, the Senate passed a bill that would require U.S.-listed Chinese companies to comply with U.S. auditing and reporting standards or face delisting. The bill has yet to be passed in the House of Representatives.
Also in May, the administration directed the Federal Retirement Thrift Investment Board—the independent body that oversees the pension fund for federal employees and military members—to halt plans to invest in stocks of Chinese companies that pose national security and human rights concerns.
Reuters contributed to this report.
From The Epoch Times
