http://server.digimetriq.com/wp-content/uploads/2020/12/Congress-Punts-on-China-Stocks.5.jpeg

Pedestrians walk along Exchange Square, the building where the Hong Kong Stock Exchange is located, in Hong Kong, November 4th.

Photo:

jerome favorites / hatch stock

The decline in Congress is a growing problem in the U.S. government, especially as it creates vague laws that allow administrative bodies to determine the actual law. The President’s bill is a good example.

Assets

An agreement prohibiting Chinese companies from being listed on US stock exchanges is expected to be signed soon, unless they open their external audits to federal regulators.

The Sarbanes-Oxley Act of 2002 requires auditors of US companies to be registered and regularly audited by the Public Company Accounting Oversight Board (PCAOB). The purpose of this provision is to ensure that auditors exercise due care, even if there is little evidence that this has improved audit quality or prevented fraud.

However, Beijing has invoked national security laws and state secrecy to prohibit the PCAOB from carrying out audits, including subsidiaries of four large US companies based in Mainland China and Hong Kong. The PCAOB has identified 262 non-U.S. companies whose audit work it is unable to assess. Most of them are in China, but some are in Belgium and France.

Congress, which unanimously passed a law that would put companies on the U.S. stock exchanges in three years if their auditors did not allow the PCAOB to audit their books. Conveyor belt

Senator John F. Kennedy

(R., La.) and

Journalist Brad Sherman

(D., California) state that Chinese companies must comply with U.S. rules in order to benefit from our rich and liquid capital markets.

To be honest, the law also contributes to Beijing’s goal of attracting foreign investors to the Hong Kong and Shanghai stock exchanges. American investors will buy shares of Chinese companies, such as. B. Alibaba, own and market, wherever they’re listed. Americans have greater protection when companies are listed on U.S. stock exchanges, where they are subject to U.S. securities laws.

Incoming legislation may also affect, among others, 200 US multinationals.

Mattel

и

Wynn Resorts

which are dependent for part of their audits on the work of companies in Mainland China and Hong Kong. After the bill passed the Senate in May, Sherman said he expected the House to amend the legislation to exempt U.S. companies.

No, no, no, no, no, no, no, no, no, no, no, no. This summer, the House of Representatives did not even find the time to hold a hearing before the bill was passed before the end of the month. This leaves hundreds of American multinationals in the dark. But don’t worry, Mr. Sherman and Mr. Kennedy have included a statement in the law that will guide regulators in interpreting the law.

The Securities and Exchange Commission shouldn’t take companies off the stock exchange unless more than a third of the total control of a company is carried out by a company that doesn’t have the PCAOB, they said. A third of the income? Are there any assets? Another metric? They also left it to the Securities and Exchange Commission.

Regulators will now pursue Congress’ unwritten intentions in the midst of frantic corporate lobbying. It is because of this disenfranchisement of the legislature that the administrative state has become so large, and the Republicans deserve as much blame as the Democrats.

Potomac Watch: In June, the Democrats called the coronavirus a great opportunity to restructure things in our own way. The Biden administration will continue this theme unless Republicans agree on budgetary discipline. Images : Zuma/AFP Composite : Mark Kelly

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Published in the printed edition of 16. December 2020.

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