China Security Times (SecuTimes or STCN) recently reported that the U.S. Securities and Exchange Commission (SEC) has stopped processing the registration of U.S. IPOs of Chinese companies and their other sales of securities. The SEC is crafting a new investor risk disclosure guidance to respond to Beijing’s recent regulatory crackdown. SEC Chairman Gary Gensler later publicly stated on the SEC official website that he raised concerns about the way Chinese companies are going public in the U.S. He said that the Chinese government has recently put forward new guidance and restrictions on Chinese companies raising funds overseas, including conducting cyber security reviews for these companies. The SEC plans to require overseas issuers related to Chinese operating companies to make more disclosures and especially to ensure that they are clearly disclosed in a prominent position. The SEC also plans to conduct additional targeted examinations on the listing applications of companies with major business operations in China. In June, the SEC removed the chairman of the Public Company Accounting Oversight Board (PCAOB). That Board was considered negligent in promoting independent audits of Chinese companies listed in the United States. The SEC is also under pressure to finalize the delisting rules for Chinese companies that do not meet the U.S. audit requirements. Around 418 Chinese companies are listed on U.S. exchanges.
Source: STCN, July 30, 2021