The U.S. Securities and Exchange Commission disclosed Thursday that officials from the Trump administration now have on their crosshairs Chinese companies listed on U.S. stock exchanges, and asking the President to remove those who fail to submit accounting documents that prove their transparency. They have until next year to comply, the officials said.
A draft report containing recommendations to safeguard the interest of American businessmen from undisclosed accounting papers from Chinese companies selling their stocks on U.S. exchanges has been made by SEC Chairman Jay Clayton and Treasury Secretary Steve Mnuchin upon the President's directive following remarks on the delisting.
It is mandatory for companies - foreign or local - to allow U.S. regulators to access their audit work records before they are authorized to trade on a U.S. stock exchange, Trump's regulatory body Working Group on Financial Markets that is also chaired by Mnuchin, said on Thursday.
A Treasury Department official, who asked not to be named during a media briefing, said the WGFM has yet to finalize details on how to carry out the guidelines on accessing foreign company ledgers. The SEC and Treasury as well as the Federal Reserve are tasked to evaluate and determine the imposition of policies on erring companies with outright delisting as penalty.
An issue that has given American regulators a lot of headaches for over 10 years is China's unwillingness to allow officers of the Public Company Accounting Oversight Board to look into the accounting books of Alibaba Group Holding, Baidu Inc. and other Chinese groups listed on U.S. exchanges. With the growing friction between Beijing and Washington, not to mention the $300 million Luckin Coffee frauc, the issue on public dislcosure of records has all the more become very critical.
According to Mnuchin, the recommendations stipulated in the draft will add layers of protection for investors and prevent unfair business practice among companies trading on U.S. stock exchange. The United States, Mnuchin pointed out, is the world's foremost authority for investment and that the country puts utmost premium on the fundamental set of standards that protect investor confidence in its financial markets.
A legislation by the U.S. Senate was passed on majority vote last May aimed at preventing some Chinese investors from trading on the U.S. stock market if they refuse to abide by the policies of audit inspections by American regulators.
