Trump administration wants to clear the stock market of suspicious Chinese companies
Trump administration officials have called on the president to remove from the list Chinese companies that are listed on US exchanges and do not meet US audit requirements by January 2022.
These calls were made after Donald Trump instructed a group of key advisors including the finance minister Steve Mnuchin and SEC Chairman Jay Clayton, prepare a report with recommendations for protecting American investors from Chinese companies whose audit documents have been hidden from regulators for a long time.
It also comes amid growing pressure from Congress to crack down on Chinese businesses that take advantage of US capital markets but fail to comply with local regulations..
«We’re just leveling the playing field by keeping Chinese market players on the same terms as everyone else.», – Treasury official told reporters at a briefing.
In May, the U.S. Senate unanimously passed legislation that could prohibit a number of Chinese companies from listing their shares on U.S. exchanges if they do not follow auditing standards and regulations..
Senator Democrat Chris Van Hollen, who sponsored the bill described the officials’ calls as «important first step», but noted that «without additional efforts, the bill itself is not implemented».
The administration’s recommendations, if implemented, will give Chinese companies already registered in the United States until January 1 2022 to guarantee the American Audit Regulator (PCAOB) access to company documents.
It is worth noting that companies looking to enter the U.S. stock market for the first time will have to comply immediately, officials said..
A State Department spokesman told Reuters that the administration plans to soon abandon a 2013 agreement between US and Chinese audit authorities to create a process for the PCAOB to search for documents in executive cases..
China has stated that the two countries have «strong cooperation» in monitoring publicly listed firms.
«The current situation is that some of the US regulatory authorities are not fulfilling their obligations, and what they are doing is political manipulation – they are trying to force Chinese companies to withdraw from the American markets.», – Foreign Ministry spokesman said Wang Wenbin at the briefing.
Beijing later softened its tone in a subsequent statement, calling for a solution to the issue through constructive dialogue..
The PCAOB has long complained that China is not meeting the authority’s requests by providing it with insufficient audit data on Chinese companies that trade on US exchanges..
The report also recommends requiring issuers and registered funds to provide more disclosures about the risk of investing in China, as well as obliging index-tracking funds to conduct more scrutiny and advise investment advisors on commitments related to investments in China..