SEC adopts measure aimed at cracking down on Chinese firms from US exchanges
The Securities and Exchange Commission (SEC) has adopted a measure designed for stricter regulation of Chinese firms from U.S. stock exchanges.
The commission said in a press release on Wednesday that it has adopted interim final amendments to implement disclosure requirements under the Holding Foreign Companies Accountable (HFCA) Act that will require firms to establish that they are not owned or controlled by a foreign governmental entity.
The SEC will also require companies to disclose any foreign arrangements and influence in their annual reports.
The commission adopted the interim regulation because it had to begin issuing rules within 90 days of the HFCA Act’s enactment. However, it is seeking public comment on the process for identifying companies that have to comply with the rule.
The SEC said it is “actively assessing” how to implement other requirements of the bill not subjected to the 90-day deadline, such as the trading prohibition requirements.
Former President Trump in December signed the HFCA Act, which is aimed at preventing companies from being listed on U.S. exchanges if they have not complied with audit requirements from the Public Company Accounting Oversight Board for three consecutive years.
Sen. John Kennedy (R-La.), who sponsored the bill with Sen. Chris Van Hollen (D-Md.), said at the time that the Chinese government has repeatedly failed to allow the Public Company Accounting Oversight Board to inspect audits of companies registered in China and Hong Kong.
“Communist China has been the bully on the playground of America’s stock exchanges for years, and that stops today,” Kennedy said in a statement.