X

CPA Supports Administration Effort to End China’s Violation of Investor Protection Laws

June 11, 2020

Committee established to investigate fraudulently listed stocks

Washington. The Coalition for a Prosperous America (CPA) appreciates President Trump’s recent executive order establishing a Presidential Working Group to stop Chinese companies from flouting U.S. securities laws. CPA has actively protested the preferential treatment given to publicly traded Chinese companies that are allowed to hide financial information from investors, even when all other companies must disclose such details.

“This is an important and overdue step,” said CPA Chair Dan DiMicco. “We’re very pleased that the president has started the process to reverse prior administrations’ mistakes of allowing Chinese companies to evade our investor protection rules. Many of these companies are national security risks and should not be allowed to raise money in our capital markets. They also pose investor fraud risks because they don’t let us see their audited financial information.”

The U.S.-China Economic and Security Review Commission (USCC) has identified 156 Chinese companies, including 11 state-owned enterprises, that are listed on America’s three largest stock exchanges. In December 2018, the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) warned investors about the challenges American regulators face when attempting to conduct oversight of U.S.-listed companies whose operations are based in China and Hong Kong. 

The White House is finally acting to address Beijing’s consistent refusal to allow full SEC and PCAOB oversight. A working group of Treasury and economic officials established by the president will now offer recommendations regarding the failure of the Chinese government to allow PCAOB-registered audit firms to comply with United States securities laws and investor protections.

“A lack of transparency and accountability for Chinese entities has been an issue for years,” said Michael Stumo, CEO of the CPA. “In 2013, the PCAOB entered into an ill-advised memorandum of agreement with Beijing that allowed Chinese companies to continue being listed on U.S. exchanges without following U.S. securities laws. Chinese securities authorities promised to rectify the matter. But, like most agreements with China, they failed to do what they promised. Many of the Chinese companies listed provide support for the People’s Liberation Army or the Uighur concentration camps. Others have violated U.S. sanctions or have been listed on the Department Commerce’s ‘entities list’. The Presidential Working Group should withdraw from the Memorandum of Agreement and begin the process of deregistering all the companies that have not complied with U.S. laws.”

Read more about Chinese companies listed on U.S. stock exchanges that are shielded from the full oversight of financial regulators.

Media Contact: 
Melissa Tallman, Marketing and Communications Director
Melissa@prosperousamerica.org
202.688.5145 ext 3

 

Press Release

Be the first to comment

Please check your e-mail for a link to activate your account.