A deadline is fast approaching for U.S. and Chinese regulators to strike a deal that would allow investors to continue trading shares of Chinese companies on U.S. stock exchanges, but Securities and Exchange Commission Chairman Gary Gensler is unsure. is not sure that an agreement can be reached.
“I don’t know if there will be a deal there,” Gensler told reporters during a virtual press conference on Wednesday. “If it was easy, it could have been solved years ago.”
The Foreign Corporations Accountability Act, passed unanimously by Congress in 2020 and signed into law by President Trump, prohibits trading in an issuer’s stock unless the Public Company Accounting Oversight Board is authorized by foreign jurisdictions to oversee their audits.
The law applies to all foreign companies, but targets China, the only country that has failed to reach an agreement with US regulators authorizing the audit process required by the Sarbanes-Oxley Act of 2002. enacted in the wake of the Enron and WorldCom accounting scandals.
After three years of non-compliance, US stock exchanges are required by law to delist an issuer’s stock, and Gensler previously said the three-year countdown began in 2021.
“It’s 20 years this month since the Sarbanes-Oxley Act was passed and 52 other countries have found their way to…allowing a mechanism for public company auditors to open themselves up to investigations and inspections,” a- he declared. “And over those 20 years, China has had access to our capital markets, but hasn’t fully complied with that.”
The regulator added that if a deal were to be struck, it would simply be a matter of “tweaking teeth” into the law to ensure the PBAOC has access to all the documents it needs to oversee the auditing of companies. listed Chinese.
The remarks follow a speech in May by YJ Fischer, head of the SEC’s Office of International Affairs, who said a deal should be reached by “early November 2022” to avoid big companies like Alibaba Group Holding Ltd. BABA,
-0.20%,
Yum China Holdings Inc. YUMC,
+0,54%,
Weibo Corp. World Bank,
+1,13%,
JD.com Inc. JD,
+3,84%
et Baidu Inc. BIDU,
+1,35%
facing a trade ban from 2023.
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