US Bill could delist some Chinese firms, United States News & Top Stories

Darnell Taylor
May 22, 2020

"Exchange-traded funds that allow investors to bet on Chinese companies were knocked lower midday Wednesday after the U.S. Senate approved sweeping new legislation that could ultimately bar many Chinese companies from listing shares on U.S. exchanges", a MarketWatch report said.

Chinese companies listed on the USA stock exchanges have recently been under intense scrutiny after the incident involving Luckin Coffee.

It also requires public companies to disclose whether they are owned or controlled by a foreign government, including China's Communist government.

This is not the first time the U.S. has passed a Bill targeting China.

"We can't let foreign threats to Americans' retirement funds take root in our exchanges", said Sen.

Nevertheless, the bill still has to pass the House of Representatives.

The legislation - S. 945 - is another example of the rising bipartisan pushback against China in Congress that had been building over trade and other issues.

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On Tuesday Luckin said the Nasdaq exchange had notified the company of plans to delist it due to concerns over the alleged fabricated sales and disclosure failures. The US-listed Chinese companies may become targets for short-selling. But he noted a drawback to increasing oversight would be that these companies would simply say, "Okay, we'll move to London or we'll go to Hong Kong".

The bill seeks to delist Chinese companies who don't abide by U.S. accounting laws.

If the bill gets finalized, Chinese companies such as Alibaba and Baidu will have some new rules to comply by.

American officials have long complained that Chinese domiciled firms - including those trading on US exchanges - are too secretive and do not abide by USA audits, regulations and accounting standards.

The Public Company Accounting Oversight Board, which audits the accounts of public companies, is prohibited from inspecting the accounts of companies registered in China or Hong Kong, according to one of the bill's sponsors, John Kennedy, a Republican senator from Louisiana. "Publicly listed companies should all be held to the same standards, and this bill makes common sense changes to level the playing field and give investors the transparency they need to make informed decisions", co-sponsor of the Bill Senator Van Hollen said.

While not technically part of the government, the PCAOB is overseen by the Securities and Exchange Commission.

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