Allison Herren Lee, commissioner of the United States Securities and Exchange Commission (SEC), speaks during a hearing of the House Financial Services Commission in Washington on Tuesday 24th September 2019.
Bloomberg | Bloomberg | .
Chinese listed companies on US exchanges need to disclose risks of the Chinese government interfering in their activities as part of they regular reporting requirements, a major US Securities and Exchange Commission official She said on Monday.
Democratic Commissioner Allison Lee’s comments are i first by a SEC official ever since Chinese regulators launched a massive cyber investigation of the carousel giant Didi Global last week, just days after its $ 4.4 billion New York listing, writing off 25% off his share price.
The US authorities have cracked down on other Chinese companies listed in the United States and may require mentoring firms to become nonprofits, according to a Bloomberg report that hit shares in sector, including TAL Education Group and Gaotu Techedu, listed in New York.
Some politicians fear that Chinese companies are systematically mocking the United States rules, which require public company to disclose to investors a range of potential risks to their businesses.
“Public companies must disclose significant risks that, for Issuers with headquarters in China can sometimes involve risks related to regulatory environment and potential actions by the Chinese government, “Lee, who served as acting head of the SEC from late January to mid-April, he told Reuters in an interview.
The Wall Street Journal reported that Didi had been warned by regulators to delay his initial public offer and to address its cybersecurity. Didi said she had no knowledge of it of the investigation before its listing.
Lee declined to comment on if the SEC opened an investigation of Didi for potential disclosure failures.
“We should always be focused on ensure that investors are fully informed of material risks, such as the risks we have recently seen related to China, “Lee said.
A SEC spokesperson said it was a question of policy, the SEC conducts investigations on confidential and does not recognize its existence or non-existence of any investigation unless or until charges are filed.
Over the past decade, Washington politicians have focused on persuade Chinese companies listed in the United States to comply with Accounting Supervisory Board of the US public company rules. Last year Congress passed a law that would kick Chinese companies off US exchanges unless they join the standard American review.
But regulators generally haven’t focused on Disclosure problems of Chinese companies. Some lawmakers are calling for the SEC to dedicate more resources for the issue.
“US regulators need to ensure that American investors and workers are gender protected of not-market behavior which is leaving American investors burned, “Senator Bill Hagerty, who sits on the Senate Banking Committee said in a statement to Reuters.
“This includes enforcing compliance with Audit of the supervisory board of the public company Account requirements, as well as investigating whether sufficient information has been provided on the serious potential investment risks associated with it with a tale centralized control economy”said Hagerty.
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