U.S. Moves to Tighten Disclosure Requirements for Chinese Listings

U.S. Moves to Tighten Disclosure Requirements for Chinese Listings

  • Report comes amid rising tensions between U.S. and China
  • Currently listed companies would have until 2022 to comply

A high-powered group of U.S. regulators said stock exchanges should set new
rules that could trigger the delisting of Chinese companies, following
mounting concerns that investors are being exposed to frauds.

The President’s Working Group on Financial Markets said Thursday that in
order to trade on a U.S. exchange, companies must grant American regulators
access to their audit work papers. The group hasn’t determined how to enforce
the guidelines, said a senior Treasury Department official who briefed
reporters on the condition of anonymity. While the final penalty would be
removal from U.S. exchanges, the Treasury and Securities and Exchange
Commission would establish how binding the mandate is in implementing the
rules.

The recommendations target a problem that has vexed U.S. regulators for
more than a decade: China’s refusal to allow inspectors from the Public
Company Accounting Oversight Board to review audits of Alibaba Group
Holding Ltd., Baidu Inc. and other firms that trade on American markets. The
issue has gained added urgency due to rising tensions between Washington
and Beijing and following this year’s high-profile accounting scandal at Luckin
Coffee Inc.