On Wednesday (25), the U.S. Securities and Exchange Commission (SEC) adopted an “interim final amendment”, the SEC is open for public comment on which foreign companies are deemed not to meet the U.S. auditing standards.
As the SEC adopted the temporary amendment to take stricter regulatory measures, Chinese stocks fell on Wednesday.
Before press Time, U.S. stocks fell 0.12% during the mid-day session on Wednesday (around 1 a.m. Taipei time) for Sina (SINA-US); 7.31% for Baidu (BIDU-US); 2.88% for Alibaba (BABA-US) and 4% for Jingdong (JD-US).
The U.S. Securities and Exchange Commission (SEC) announced on Wednesday the adoption of “interim final amendments” to implement the disclosure requirements under the Foreign Company Accountability Act (HFCA).
The SEC adopted the “interim final amendments” because the regulations must begin issuing rules within 90 days of the HFCA’s enactment, and the SEC is soliciting public comment to identify companies that must comply with the rules.
The SEC is actively evaluating how to implement other requirements of the Act that are not subject to the 90-day deadline, such as the prohibited transaction requirement. Following the public comment period, the Interim Final Amendment will become effective 30 days after publication in the Federal Register.
The Foreign Company Accountability Act, which targets Chinese companies, was signed into law by former President Trump on Dec. 18 of last year.
The Act requires foreign companies to be delisted from U.S. exchanges if they fail to comply with Public Company Accounting Oversight Board (PCAOB) audits for three consecutive years. The rule also applies to unlisted stocks traded over-the-counter.
Those companies that are unable to undergo an audit examination by the board must also determine that they are not controlled or owned by a foreign government.
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