SEC one step closer to 2024 mass delisting of Chinese companies
Business & Technology
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The U.S. Securities and Exchange Commission adopted a new rule Wednesday that lays the groundwork for a potential mass delisting of roughly 270 Chinese companies traded in the U.S., in accordance with a 2020 law.
- The Holding Foreign Companies Accountable Act says U.S.-listed foreign companies will be delisted if they are “non-compliant” in sharing audit results for three straight years. The new SEC rule clarifies what non-compliant means: companies based in a jurisdiction where authorities refuse to let businesses cooperate.
- In other words: The rule is aimed at companies in China. SEC chief Gary Gensler wrote in an op-ed last week that non-compliant companies will be delisted in 2024, or even one year earlier, according to a bill pending in Congress that would accelerate the process.
The context: Ever since U.S. investors got burned by Luckin Coffee last year — its stock fell 90% and it was ultimately delisted from the Nasdaq after revelations of fabricated sales — Washington has been on a mission to ensure Americans know exactly what they’re investing in. Beijing’s latest crackdowns and the collapse of U.S.-listed stocks like New Oriental Education and Didi Chuxing are further evidence of the investment risk.
