As Beijing is determined to exploit American investors, I have fought for greater accountability for foreign companies that use American capital. The SEC finally has the power to quickly delist fraudulent Chinese companies from US exchanges, reminding China that playing by the rules is not optional.
Madisonville, La. – Sen. John F. Kennedy’s (R-La.) Foreign Corporations Fast Track Act was signed into law today as part of a package of bills. The Kennedy Act increases the liability of Chinese companies that refuse to submit to US financial oversight and closes the loophole that Chinese companies use to avoid such oversight.
Companies affiliated with the Chinese Communist Party have violated US security laws and put Americans’ retirement savings at risk. As Beijing is determined to exploit American investors, I have fought for greater accountability for foreign companies that use American capital. The SEC finally has the power to quickly delist fraudulent Chinese companies from U.S. exchanges and remind China that enforcement is not optional. Kennedy said.
In December 2020, the president signed the Kennedy Foreign Holding Company Accounting Act, which prohibits foreign companies from listing their securities on any U.S. exchange if the company fails Public Company Accounting Oversight Board (PCAOB) audits for Three short courses. For years on end, this law has protected the interests of hard-working American investors by ensuring that foreign companies doing business in the United States are subject to the same independent auditing requirements that apply to their competitors in the United States and other countries.
The Foreign Corporation Accountability Act accelerates this progress by putting more pressure on China. The Kennedy Act requires foreign companies to comply with PCAOB audits for two consecutive years instead of three. This will help more quickly remove fraudulent and non-compliant companies from US exchanges so they cannot continue to put hard-working Americans at risk.
Background:
Congress established the PCAOB to oversee the audits of public companies and ensure that the information companies provide to the public is accurate, independent, and reliable.
Historically, the Chinese Communist government has not allowed the PCAOB to conduct audits of companies registered in China and Hong Kong. Such companies are a big risk for American investors, as roughly 11 percent of all securities class action lawsuits filed in 2011 were against Chinese companies accused of misrepresenting themselves in financial filings.
According to the Securities and Exchange Commission, 224 U.S. listed companies are based in countries where there are barriers to PCAOB inspection. Together, these companies have a market capitalization of more than $1.8 trillion.
In the past 10 years, the number of Chinese companies listed on US stock exchanges has increased significantly, as these companies use capital in the US.