US SEC Chair: "Chinese Companies Must Disclose Investment Risk Information"

Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC)
Photo by Reuters Yonhap News

[Asia Economy Reporter Kim Suhwan] Amid the plunge in stock prices of Chinese companies listed on the U.S. stock market due to regulatory pressure from the Chinese government, Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), has issued a warning about the investment risks associated with Chinese companies.

According to Bloomberg News on the 16th (local time), Chairman Gensler said in a video message that U.S. investors do not know much about Chinese companies listed on the U.S. stock market.

Gensler added, "Investors want to obtain more information about the structure of Chinese companies," and "this means that Chinese companies need to disclose information related to political and regulatory risks imposed by the government."

Bloomberg News evaluated this as the most direct warning issued by Chairman Gensler regarding the investment risks of Chinese companies.

This warning came amid the recent plunge in stock prices of Chinese companies listed on the U.S. stock market as the Chinese government has intensified regulatory pressure on domestic companies.

Recently, China ordered all private education companies to convert to non-profit organizations and banned both foreign investment attraction and paid-in capital increases.

China also strengthened regulations on domestic companies, such as requiring internet service providers with over one million members to undergo cybersecurity reviews when listing overseas.

As regulatory risks from the Chinese government have become more visible, Chairman Gensler instructed SEC staff to temporarily halt approval of listings for shell companies frequently used by Chinese companies when listing on the U.S. stock market.

Earlier, on the 30th of last month, the SEC announced plans to strengthen listing reviews for Chinese companies.

Meanwhile, on the same day, Chairman Gensler emphasized that U.S. authorities must be able to inspect the accounting of Chinese companies listed on the U.S. stock market, adding, "If auditors do not disclose the accounting books of Chinese companies within three years, those companies will not be allowed to list in the U.S."

The U.S. House of Representatives also passed a bill last December allowing companies that do not comply with accounting audit standards to be delisted from the U.S. stock market.

This content was produced with the assistance of AI translation services.