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WASHINGTON — The Senate today passed Sen. John Kennedy’s (R-La.) Accelerating Holding Foreign Companies Accountable Act. The bill would increase accountability for Chinese companies that refuse to submit to US financial supervision and close a loophole that Chinese companies use to avoid such supervision.
“When foreign companies violate U.S. security laws, they jeopardize Americans’ retirement plans and savings. China is out to exploit US investors, so we need more responsibility for foreign companies that use US capital, and we need it now. I am pleased to see that the Senate today took a huge step by voting to give the SEC the ability to kick fraudulent Chinese companies off the US stock exchanges more quickly. I hope the House sends this sensible bill to the President’s Office before foreign companies defraud more workers and families here at home.” said Kennedy.
Last December, President Trump signed the Kennedy’s Holding Foreign Companies Accountable Act, which prohibits foreign companies from listing their securities on any of the U.S. exchanges if the company has failed to pass audits by the Public Company Accounting Oversight Board (PCAOB) in three years. a row. The law protects the interests of hard-working US investors by ensuring that foreign companies traded in the US are subject to the same independent auditing requirements that apply to their competitors in the US and other countries.
The Accelerating Holding Foreign Companies Accountable Act would put additional pressure on China by requiring foreign companies to pass PCAOB audits within two consecutive years instead of three. This would help remove fraudulent and non-compliant companies from US exchanges more quickly.
The bill would also apply the Holding Foreign Companies Accountable Act to Chinese companies that use accounting firms in Taiwan or Singapore and fail to comply with PCAOB inspections due to Chinese law.
“ASA applauds the Senate for coming together again and unanimously passing common sense legislation to protect the American people and end the exploitation of our capital markets by Communist China. We thank Senator Kennedy for his leadership in accelerating a timeline that now forces Chinese companies to meet our audit and regulatory requirements much more quickly, and we urge the House to move this bill to the President’s Office quickly. to bring. A bipartisan Washington is finally waking up to the threat from China and it’s time for Wall Street to do the same. US stock exchanges must ensure that money from US investors is not used to fund Beijing’s gross human rights violations and genocide by immediately stopping the IPO of Chinese companies and delisting any Chinese company from their exchanges until those companies can prove that they are NOT controlled by the CCP.” said Chris Iacovella, CEO of the American Securities Association.
Background:
Congress established the PCAOB to inspect audits of public companies and ensure that the information companies provide to the public is accurate, independent and reliable.
Currently, the communist government of China is refusing to allow the PCAOB to inspect audits of companies registered in China and Hong Kong. Such companies pose a significant risk to US investors, as nearly 11 percent of all securities class action lawsuits in 2011 were filed against Chinese companies accused of misrepresenting themselves in financial documents.
According to the Securities and Exchange Commission, 224 US-listed companies are located in countries where there are barriers to PCAOB inspections. These companies have a combined market capitalization of more than $1.8 trillion.
Over the past 10 years, the number of Chinese companies listed on US stock exchanges has increased significantly as these companies benefit from the available capital in America.
The text of the Accelerating Holding Foreign Companies Accountable Act is available here.
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