Ruixing Coffee ’s financial fraud has made the US securities regulators awesome. On April 22, the US Securities and Exchange Commission (SEC) Chairman Jay Clayton claimed that investors should not invest money in the shares of Chinese companies listed in the United States.
According to Reuters reports, Jay Clayton (Fox Business Network) “Morning with Mary” on the Fox Business Network ( Morning with Maria) claims, “We have been fighting the Public Company Oversight Committee (PCAOB) for a long time to obtain audit working documents, and the committee still does not have access. This disappoints us.”
Clayton also defended the above remarks, claiming that “because from a financial reporting point of view, our business in China is not as supervised as in other parts of the world.”
PCAOB was established under the Sarbanes-Oxley Act and is regulated by the SEC. The responsibility of PCAOB is to supervise the accounting firms that sign the books of US public companies.
Previously, some Chinese stocks listed in the US were accused of fraud.
On the evening of April 2, the coffee chain Ruixing (Nasdaq: LK) disclosed in the company ’s internal special committee that the counterfeit transaction reached 2.2 billion yuan.
On the evening of April 7, the US short agency Wolfpack Research released a 37-page report to bear short on iQIYI, claiming that iQIYI had fraudulent behavior before it went public in 2018. And continued to falsify after listing. The short-selling agency said that iQiyi is expected to increase its revenue in 2019 by 8 billion to 13 billion yuan, accounting for 27% -44% of its revenue, and the company has increased its number of users by 42% -60% .
Subsequently, Muddy Water also claimed to help Wolfpack Research to investigate iQIYI for a year, and has shorted the stock.
Regarding this, iQiyi responded that: The third-party organization issued a report questioning iQiyi, and its cited data and conclusions were seriously inaccurate and inconsistent with the actual situation. As a responsible listed company, all financial and operational data we disclose are true and in line with the SEC requires that we resolutely deny all false accusations and reserve the right to pursue legal actions.
On the same day, Good Future issued an announcement saying that certain “employee misconduct” was discovered during the routine internal audit process, and affected by this, Good Future The stock price plunged 28% after the market. Good Future stated in the announcement that this employee has been detained by the local police. In the future, the company suspects that the employees in question colluded with external suppliers, forged contracts and other documents, and erroneously exaggerated the “Light Class” sales data, accounting for 3% to 4% of the company’s total revenue in fiscal 2020.
As Clayton made the above remarks, American hawkish lawmakers and some former officials are trying to persuade the Trump administration to stop federal employees ’pension plans from investing in China Corporate stocks. These regulations will also allow US investors to file class actions against companies that make false statements in financial reports, giving investors more protection against fraud in related companies.
A report released by the US Securities and Exchange Commission yesterday warned investors about the risks involved in investing in emerging markets on a larger scale.
“Now is the time for institutional investors to experience, rebalance and evaluate their portfolios.” Clayton claimed on the show, “We remind people that when you look at When it comes to the information disclosed in an emerging market, it may look like a report from a domestic US issuer, but it is not the same kind of investment. “
Chris Iacovella, chief executive of the American Securities Association, said Clayton had issued an alarm again. Allegedly, until now, Yakovila has been studying this issue for at least a year.
The aforementioned SEC report also stated that Chinese companies listed in the United States should “prominently raise risks in plain and easy-to-understand language and deal with them in specific ways discuss”. The report claims that the US Securities and Exchange Commission and other relevant departments often encounter great difficulties in bringing and enforcing lawsuits against non-US citizens. The company makes false disclosures on the nature and quality of financial information, including financial reports and audits.
However, what Clayton and the US Securities and Exchange Commission ignore is that it is also worthy of market attention that there are currently more than 200 Chinese stocks listed in the US , Of which there are many high-quality companies. In 2000, the representative of the domestic portal website Sina, netYi and Sohu went public in the US, and then Internet giants represented by BATJ (Baidu, Alibaba, Tencent, JD.com) also successfully listed overseas. Alibaba became a Big Mac with a market value of more than US $ 500 billion, followed by 10 The market value of several companies exceeds 10 billion US dollars, and the market value is more in the range of 1 billion to 10 billion US dollars. As of the close of US stocks on April 22, Pinduoduo continued to make new highs, with a market value exceeding 60 billion U.S. dollars; Bili Bili rose more than 5%, and its market value exceeded 10 billion U.S. dollars. Its intraday share price reached 30.50 U.S. dollars, also hitting a record high.