Wall Street’s top regulator singles out China, as it eyes new rules on foreign firms
The US Securities and Exchange Commission says many Chinese firms unduly benefit from having to make fewer regular disclosures to investors
Wall Street’s top regulator took a step toward toughening rules for foreign companies listed on American stock markets on Wednesday, saying many Chinese firms in particular unduly benefited from having to make fewer regular disclosures to investors.
The US Securities and Exchange Commission voted unanimously to call for public comment on possible new regulations that would narrow the definition of those foreign companies, known as foreign private issuers, that are required only to produce annual reports and occasional updates.
US firms trading on the same stock exchanges fall under the full scope of American securities laws, including quarterly financial reporting, proxy solicitation rules and prompt disclosure of events such as mergers and the departures of board members.
If adopted, any new regulations could make it more costly and challenging for many foreign companies to tap US equity markets.
At a public SEC meeting, Paul Atkins, the newly installed Republican chair, said 55 per cent of foreign private issuers were traded only in the United States and of those, the majority were Chinese firms incorporated in the Cayman Islands.
A congressional study last year found that 90 per cent of the 265 US-listed Chinese companies were not traded outside the United States.