Like Causes?

Install the App
TRY NOW

senate Bill S. 945

Should Foreign Companies Have to Undergo Audits by U.S. Financial Regulators to Participate in American Stock Exchanges?

Argument in favor

Some of the foreign companies that trade or seek to trade securities on U.S. stock exchanges have resisted audits by American financial regulators, and are effectively controlled by foreign governments (like the Chinese Communist Party). This bill would require such firms to undergo audits and certify their independence from their national government or be kicked off the stock exchange.

burrkitty's Opinion
···
12/02/2020
This is a good modification to the SOX Act. Fundamentally, SOX is corporate accountability and transparency law and this just continues that further. Interestingly, this is a hysterical flip flop from Republicans as they were deeply opposed to SOX initially, but it improved investment confidence and resulted in more accurate financial statements from corporations at a very low cost. So I think this is a good addition to SOX. A little late, a little cumbersome, but still good.
Like (28)
Follow
Share
Joan's Opinion
···
12/01/2020
I was going to ask “What took so long?” But then I figured it out. With both trump and slyvana with substantial “dealings” with China, they did not want to upset their substantial applecarts by putting this legislation through earlier! Another thought, why wait 3 yrs. before insisting on transparency, a lot of damage can be done in 3 yrs.!
Like (8)
Follow
Share

Argument opposed

The U.S. economy benefits from international participation in its stock exchanges, and it shouldn’t require foreign companies to submit to audits or certify that they’re not controlled by foreign governments to trade their securities. Delisting foreign companies that refuse to comply with this bill’s requirements would hurt international trade and make the economy less vibrant.

Frank-001's Opinion
···
12/01/2020
Representatives Oppose This Bill! The bill has two essential parts audits and ownership. I agree that all listed companies be audited. That’s merely financial responsibility. Who would ever invest in a company that didn't permit audits? That would be foolish. Ownership alone should be irrelevant. That’s a statement about a given country’s economic philosophy. Why force capitalism on everyone on the planet? Arrogance! We should be far more concerned with product quality, fair labor practices, proper pricing, consumer protections, and environmental responsibilities. BTW - I support case by case sanctioning when necessary. This bill is not about sanctions.
Like (11)
Follow
Share
Hello's Opinion
···
12/02/2020
The voting machines were tampered with as we all know. But something is scaring people away from the truth.
Like (1)
Follow
Share

What is Senate Bill S. 945?

This bill — the Holding Foreign Companies Accountable Act — would require foreign companies trading securities on American stock exchanges to submit to audits by U.S. financial regulators, in addition to certifying that they aren’t controlled by foreign governments (such as the Chinese Communist Party). Foreign companies that refuse to comply with this requirement for three consecutive years would be delisted from U.S. stock exchanges, effectively denying them access to U.S. capital markets.

Companies that trade on U.S. stock exchanges would be required to certify they aren’t owned or controlled by a foreign government if the Public Company Accounting Oversight Board (PCAOB) is unable to audit a company’s financial reports because the company retained a foreign public accounting firm that isn’t subject to inspection by the PCAOB. The PCAOB is a nonprofit corporation established by Congress to oversee audits of publicly traded companies.

If the PCAOB isn’t able to inspect the company’s foreign accounting firm for three consecutive years, the company’s securities would be prohibited from trading on a U.S. national stock exchange.

Impact

Foreign companies participating on U.S. stock exchanges; foreign governments; and the PCAOB.

Cost of Senate Bill S. 945

A CBO cost estimate is unavailable.

More Information

In-DepthSen. John Kennedy (R-LA) introduced this bill to require foreign companies to submit to audits and certify that they aren’t controlled by a foreign government in order to access capital through U.S. stock exchanges, and offered the following statement on its passage by the Senate:

“The SEC works hard to protect American investors from being swindled by American companies. It’s asinine that we’re giving Chinese companies the opportunity to exploit hardworking Americans ― people who put their retirement and college savings in our exchanges ― because we don’t insist on examining their books. There are plenty of markets all over the world open to cheaters, but America can’t afford to be one of them. China is on a glidepath to dominance and is cheating at every turn. I hope my colleagues in the House will immediately send this bill to the president’s desk so we can protect Americans and their savings.”

Lead cosponsor Sen. Chris Van Hollen (D-MD) added:

“As we continue to experience the economic fallout and volatility caused by the COVID-19 pandemic, the need to protect main street investors is all the more important. For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards, and this bill makes commonsense changes to level the playing field and give investors the transparency they need to make informed decisions.”

The Trump administration has expressed support for this legislation, making it likely to be signed into law if the House sends it to President Donald Trump’s desk. White House Economic Advisor Larry Kudlow told Fox Business:

“We have to [push for] investor protection, and we have to for national security. A lot of these companies, by the way, have already had scandals and cost investors a lot of money because of their failure to be transparent in their reporting. The Chinese government forbids that kind of transparency.”

This legislation has the support of four cosponsors, including three Republicans and one Democrat. It passed the Senate Banking Committee by unanimous consent before it passed the full Senate by unanimous consent.


Of NoteWhile this bill would apply to companies from all foreign nations seeking to trade on U.S. stock exchanges, it is primarily intended to force Chinese companies to submit to audits by American regulators. Because of those companies’ refusal to submit to legitimate audits, there is heightened risk that they’re misrepresenting information to investors

Securities & Exchange Commission (SEC) data shows that 11% of all securities class action lawsuits in 2011 were brought against Chinese-owned companies accused of financial misrepresentation. According to the SEC, there are 224 companies listed on U.S. exchanges with a combined market capitalization of over $1.8 trillion that are located in countries where there are barriers to accounting inspections. 

If this bill becomes law, it would force major Chinese companies like Alibaba to comply with U.S. financial oversight rules or face “delisting” (e.g. getting kicked off the exchange).


Media:

Summary by Eric Revell

(Photo Credit: iStock.com / Grindi)

AKA

Holding Foreign Companies Accountable Act

Official Title

A bill to amend the Sarbanes-Oxley Act of 2002 to require certain issuers to disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board from performing inspections under that Act, and for other purposes.

bill Progress


  • EnactedDecember 18th, 2020
    The President signed this bill into law
  • The house Passed on a voice vote
  • The senate Passed on a voice vote
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
    IntroducedMarch 28th, 2019
    This is a good modification to the SOX Act. Fundamentally, SOX is corporate accountability and transparency law and this just continues that further. Interestingly, this is a hysterical flip flop from Republicans as they were deeply opposed to SOX initially, but it improved investment confidence and resulted in more accurate financial statements from corporations at a very low cost. So I think this is a good addition to SOX. A little late, a little cumbersome, but still good.
    Like (28)
    Follow
    Share
    Representatives Oppose This Bill! The bill has two essential parts audits and ownership. I agree that all listed companies be audited. That’s merely financial responsibility. Who would ever invest in a company that didn't permit audits? That would be foolish. Ownership alone should be irrelevant. That’s a statement about a given country’s economic philosophy. Why force capitalism on everyone on the planet? Arrogance! We should be far more concerned with product quality, fair labor practices, proper pricing, consumer protections, and environmental responsibilities. BTW - I support case by case sanctioning when necessary. This bill is not about sanctions.
    Like (11)
    Follow
    Share
    Where is Covid legislation? Why are legislators working on all these obscure issues & bills? Trying to look busy? It’s not working!
    Like (21)
    Follow
    Share
    So, the Chinese may allow audits by the US, but currently it is against their laws to have foreign countries audit their companies. This could backfire on us and have China looking for other exchanges in the world to list their securities. I will need more information.
    Like (13)
    Follow
    Share
    I was going to ask “What took so long?” But then I figured it out. With both trump and slyvana with substantial “dealings” with China, they did not want to upset their substantial applecarts by putting this legislation through earlier! Another thought, why wait 3 yrs. before insisting on transparency, a lot of damage can be done in 3 yrs.!
    Like (8)
    Follow
    Share
    As I understand it, it is the Chinese government’s ownership and/or subsidization of businesses that has allowed the flouting of international law for decades. That behavior has allowed China to gather market share and capital by selling product at artificially low prices, meaning at a loss which violates international law, and stealing intellectual property from other countries without fear of prosecution, also in violation of international law. These activities have, in turn, allowed them to take over manufacturing from other countries and to buy up natural resources in other countries which I expect they will eventually weaponize by leveraging monopolies. All foreign companies and governments should, in my opinion, be held to the same standards if they wish to access our markets, regardless of their own laws that exempt them from the same accountability as everyone else. All countries and their resident companies should be held accountable to the same international laws as everyone else, including China which has been a shameless and arrogant violator for years. The only exception, in my opinion, should be in the case of separately negotiated trade agreements.
    Like (7)
    Follow
    Share
    The Chinese government has already demonstrated that they can not be trusted. If they want to play in our arena, they must abide with the requirements or walk.
    Like (6)
    Follow
    Share
    Heck Yes, I know when I was in the service a lot of companies did not pay taxes after 18 months of being overseas. They were still American companies and employees.
    Like (6)
    Follow
    Share
    Trust but verify.
    Like (4)
    Follow
    Share
    All should not just foreign but domestic too
    Like (3)
    Follow
    Share
    Save lives! Bipartisanship!
    Like (3)
    Follow
    Share
    Sure. But money men don't really care where the money comes from as long they get their cut. There are no ethics on Wall Street.
    Like (3)
    Follow
    Share
    Bout time.
    Like (3)
    Follow
    Share
    Well this process would have “eliminated” #45’s ability to even Run for Office....about time.
    Like (3)
    Follow
    Share
    It appears a logical safeguard in our economic system to implement such a requirement.
    Like (2)
    Follow
    Share
    Absolutely! A foreign company needs to be scrutinized by the same laws, rules and regulations of a domestic co. This should be obvious!
    Like (2)
    Follow
    Share
    We need more transparency in financial markets
    Like (2)
    Follow
    Share
    We saw what happened with TikTok and the whole China spyware thing. I invest in stocks (just a few dollars), but I wouldn’t want to invest in a company controlled by a foreign government which may be doing who-knows-what to American citizens. This could be a problem, especially with China, if this bill isn’t passed. I don’t trust the CCP at all nor any sketchy Chinese companies that have affiliations with the Chinese government.
    Like (2)
    Follow
    Share
    All of the companies that participate on the exchange should have to play by the same rules.
    Like (2)
    Follow
    Share
    Once again a no brainer. One question- Just when is congress going to start to work for the American public?
    Like (2)
    Follow
    Share
    MORE