Senate gives bill on monitoring of Chinese companies, Alibaba shares fall

Senate gives bill on monitoring of Chinese companies, Alibaba shares fall
Senate gives bill on monitoring of Chinese companies, Alibaba shares fall

The Senate on Wednesday passed legislation that could prevent many Chinese companies from listing shares on US exchanges. Americans or they raise money from American investors without following Washington's regulatory and auditing standards.

The bill, sponsored by Louisiana Republican Senator John Kennedy, would require companies to certify that "they are not owned or controlled by any foreign government." China-based e-commerce giant Alibaba looked at its US listed shares. The US fell over 2% on the news.

While the law could apply to any foreign company seeking to access the US capital, the lawmakers say the move is primarily aimed at Beijing to strengthen disclosure requirements.

The White House declined to comment.

A member of the Senate Banking Committee, Kennedy wrote on Twitter Tuesday afternoon, "The Chinese Communist Party cheats, and the Foreign Trade Obligations Act will prevent them from cheating the US stock exchanges." "We cannot allow foreign threats to the retirement fund of Americans in our exchanges."

Specifically, the statute would require a foreign company to certify that it is not owned or operated by a foreign government if the public company's board of accounting oversight cannot audit specific reports because the company is a foreign accounting firm's Uses that are not subject to the subject. Board inspection. If the board cannot inspect the company's accounting firm for three consecutive years, the issuer's securities are prohibited from trading on the national exchange.

The Public Company Accounting Oversight Board is the non-profit body overseeing the Securities and Exchange Commission, which oversees audits of all US companies that want to raise money in the public markets.

The unanimous passage of the bill around noon reflects growing anger among US lawmakers toward China, their handling of the Kovid-19 outbreak, and what many US regulators say is a continuing disregard for disclosure standards. American Financial.

"Fortunately, this is a call for China to bring itself in line with the rest of the world and bring transparency to the audits of its companies," said Kate Willems, a former trade advisor to the Trump administration and a partner at Akin Gump. Cnbc

The sentiment towards China is not limited to the capitol.

Last week, the White House ordered the agency to oversee billions in federal retirement savings to prevent its plans to invest in Chinese companies. Labor Secretary Eugene Scalia warned that the current plan to invest federal savings would "invest billions of dollars in retirement savings at risky companies that pose a threat to the national security of the United States."

Scalia, who cited a bipartisan call to restrict US investment in China, wrote that President Donald Trump was concerned that federal employees, including members of the US military, could possibly support companies at odds. With American geopolitical interests.

A letter of support written by National Economic Council Director Larry Kudlow and National Security Advisor Robert O'Brien reinforced the White House's view that such investments in China could raise significant humanitarian and security concerns. National for the United States. ""

The Securities and Exchange Commission, the entity overseeing broad swats of US stock markets and federal regulations, also recently warned that investing in foreign-based companies could present extraordinary risks.

"In many emerging markets, including China, the risk of disclosures being incomplete or misleading has increased significantly and, in the event of investor loss, less access to resources than domestic US companies," SEC Chaman Jay Clayton said on April 21 in a Said in the press release.

The SEC announced on Monday that it would host a roundtable on July 9 to "listen to the views of investors, other market participants, regulators and industry experts on the risks of investing in emerging markets, including China."

Investors have long called on the SEC to clamp down on serious trading practices.

Those pleas have increased in recent weeks after Lakin Coffee, once a promising new China-based coffee chain and a promising rival for Starbucks, revealed in April that its chief operating officer built sales. About 2.2 billion yuan (310 million dollars) in 2019.

Lakin, which is listed on the US stock markets. Through a US deposit receipt in the US, it fell more than 90% in 2020, and the company fired its CEO and COO.

The company said in a regulatory filing on Tuesday that it received a written notice from Nasdaq employees, determining that "public interest concerns" and "past failure to disclose material information publicly" led to its actions. Must be removed from the list.

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