US-China accounting war: SEC adds Baidu, Futu and three more to list of companies liable under audit oversight law

Futu, iQiyi and Baidu are the latest named by the SEC under the Holding Foreign Companies Accountable Act (HFCAA), after Weibo was added on March 23

Weibo can dispute its identification by April 13, while the remaining five added can submit their appeals by April 20

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Published: 2:22pm, 31 Mar 2022Updated: 6:21pm, 31 Mar 2022

The Securities and Exchange Commission (SEC) has added five New York-listed stocks to its latest list of companies liable under a US auditing oversight law, including four Chinese internet companies.

Futu Holdings, iQiyi and Baidu are among the latest names identified under the Holding Foreign Companies Accountable Act (HFCAA), according to a March 30 statement by the SEC. Also on the list is Nocera, an agricultural services company based in Atlanta, and CASI Pharmaceuticals, which develops cancer drugs in Rockville, Maryland.

The HFCAA, enacted during the twilight of Donald Trump’s administration, requires US-listed foreign companies to comply with audit inspection rules under the Public Companies Accounting Oversight Board (PCAOB), or face expulsion from American stock exchanges after three consecutive years of non-compliance.

The SEC’s “role at this stage of the process is solely to identify issuers that have used PCAOB-identified public accounting firms to audit their financial statements”, according to the statement.

Under the “rebuttable presumption” clause in US legislation, companies identified by the SEC can dispute their addition. Weibo Corporation, which was added to the SEC list on March 23, has until April 13 to submit its appeal, while the deadline for the remaining five is a week later on April 20.

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