The time has long passed for Washington to force Chinese companies to provide the same investor protections that U.S. companies have for decades, says Democratic Rep. Brad Sherman of California, who is leading the effort in the House of Representatives to force Chinese companies to submit to U.S. securities laws, or be barred from raising money in U.S. financial markets.
“The purpose here is not to delist or de-register; it’s to demand that China do what every other country has done and agree that if their companies want to participate in U.S. capital markets, they agree to live by U.S. capital-markets rules,” Sherman argued in an interview with MarketWatch. “It’s time for China to blink first for the benefit of investors.”
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Sherman introduced a House version of the Holding Foreign Companies Accountable Act Wednesday night, after the bill passed the Republican-controlled Senate earlier in the day with unanimous support.
The bill would require that foreign companies let the Public Company Accounting Oversight Board oversee the auditing of their financial records if they want to raise money by selling stocks or bonds to the American public. All U.S. companies and most foreign entities already work with the PCAOB in this way, but Chinese companies do not.
The PCAOB was created by the 2002 Sarbanes-Oxley Act, in response to the…