SEC’s Gensler says it’s unclear if US and China will reach a deal to avoid stock delistings
- Chinese companies face a 2024 deadline of being kicked off American stock exchanges for lack of access to audit work papers
- SEC has started adding companies on a provisional list amid measures in Congress to speed up compliance
Gensler said on Tuesday that it is ultimately Beijing’s decision whether to grant access to American audit inspectors as required by US law, adding that talks between the two sides had been “constructive.”
“I just really don’t know right now” over the prospects of reaching a deal, he said in an interview. “It’s going to be choices made by the authorities there.”
The US and China have been at odds for two decades over the legal requirement, which is meant to protect investors from accounting frauds and other financial malfeasance. The 2024 deadline stems from a 2020 law called the Holding Foreign Companies Accountable Act that was popular with both Democrats and Republicans.
Dozens of other countries permit the US audit inspections, giving officials the go ahead to interview local accountants and scrutinise the documentation underlying their work. China and Hong Kong have refused, citing confidentiality laws and national security concerns.
Pressure for Beijing and Washington to reach a deal to avoid delistings is being amplified by measures under consideration in the US Congress that call for the process to be accelerated. If those become law, Chinese audit firms would have even less time to comply.
Gensler also discussed cryptocurrency regulation. While he declined to say whether the SEC might release new rules for digital assets, his agency had long-standing authorities to regulate the sector, he added.