FOREIGN companies, including Chinese state-owned enterprises, should adhere to international financial market standards to avoid damaging their standing in the investment community, according to a former chairman of the US Securities and Exchange Commission (SEC). Richard Breeden, who was with the SEC from 1989 until this year, said several Chinese listings in the US had been well received. Speaking in Hong Kong yesterday as the chairman of Coopers & Lybrand's financial services group, Mr Breeden said Chinese state-owned firms should continue to tap the US equity market and Hong Kong. ''The US equity market is by far the world's largest and for large companies doing a large scale privatisation or raising capital in large sums, having the issue traded in the US is highly advantageous,'' he said. ''Frankly, I think any Chinese company that confines its capital raising to Hong Kong will be making a mistake. A large company in China should be in the US market along with Hong Kong. ''This is also true for large companies from around the world. Increasingly, we live in a market in which large companies have the ability to tap capital sources around the world when that capital is available in most attractive terms.'' Mr Breeden warned that companies had to recognise that their US listings were not one-off transactions. ''Once they do a public offering, they are undertaking an obligation. They marry those investors.,'' he said. ''From then on, you have permanent obligation to manage the company with their interest in mind, and to provide them information sufficient for them to make judgments. So it is a process that companies should understand.'' He said if a company provided false information, investor confidence would be damaged. It was crucial that China ensured companies were not allowed to breach regulatory standards in overseas markets. ''Countries whose companies are unable to meet the standards can sour their standing in the investment community,'' he said. ''That is why companies have to be rigorous in adherence to standards once they tap into international capital markets. The markets have a very long memory.'' Mr Breeden noted that there had been debate in the US about the standards that should be set for foreign companies joining the market. ''There is a conflict between the desire of stock exchanges to have more listings and the interests of investors in making sure they have detailed information to make informed decisions,'' he said.