US to delist foreign companies that do not meet its accounting standards
US Treasury Secretary Steven Mnuchin said on Monday that companies from China and other countries that do not meet American accounting standards will be delisted from the country’s stock exchanges by the end of next year.
The Treasury sent its recommendations to the US Securities and Exchange Commission, which regulates US financial markets, and said foreign companies should be held to the same standards as US companies.
Mr Mnuchin said the SEC was expected to adopt the department’s proposals.
His comments come after a report was released last week by the President’s Working Group on Financial Markets – an advisory body that included Mr Mnuchin and SEC chairman Jay Clayton – in response to President Donald Trump’s memorandum on June 4 that called for the protection of US investors from “significant risks from Chinese companies”.
“The US is the premier jurisdiction in the world for raising capital ... we will not compromise on the core principles that underpin investor confidence in our capital markets,” said Mr Mnuchin, who chaired the group.
The group’s proposed remedies “will increase investor protection and level the playing field for all companies listed on US exchanges”, he said.
The recommendations focus on an issue that has irked US regulators for many years – Beijing’s refusal to let assessors from the Public Company Accounting Oversight Board review the audits of Chinese companies such as Alibaba and Baidu that trade on US exchanges.
Industry analysts said the issue was brought to the fore due to the ongoing trade dispute between Washington and Beijing.
Mr Trump also threatened to ban Chinese video streaming app TikTok from the US over national security concerns unless an American company buys it by September 15.
Mr Mnuchin issued a warning on Monday over TikTok’s data collection and said the Treasury had the “tools” to control it.
“We can’t have an app that’s collecting information on Americans of this size and scale. It’s not going to continue to exist in this format,” Mr Mnuchin told CNBC.
“To the extent, [if] there is an appropriate US buyer that can make us comfortable with the security issues going forward, that deal will be approved ... If not, the president has given a deadline and it will be shut down.”
The Trump administration’s efforts to ban Chinese apps such as TikTok and WeChat represent “an intensification of his anti-China agenda” in the run-up to this year’s US presidential election in November, said Eli Lee, head of investment strategy at Bank of Singapore.
This “plays well to his base and, likely also, to an American public, of which 73 per cent of adults now view China unfavourably according to the Pew Research Centre,” Mr Lee said in a note yesterday.