The Democratic-run House of Representatives on Wednesday passed a bill that could bar many Chinese companies from listing shares on U.S. exchanges or otherwise raising money from American investors.
The measure, known as the Holding Foreign Companies Accountable Act, could get signed into law quickly by President Donald Trump, as it was approved by the Republican-controlled Senate in May.
The bill aims to make foreign companies let the Public Company Accounting Oversight Board oversee the auditing of their financial records if they want to raise money by selling stocks or bonds to the U.S. public. All U.S. companies and most foreign companies already work with the PCAOB in this way, but Chinese ones do not.
In August, a policy group led by Treasury Secretary Steven Mnuchin offered a more lenient approach. To get around Beijing’s refusal to let the PCAOB review the work of Chinese auditors, Mnuchin would permit Chinese firms to engage a U.S. accounting firm to do the job.
Critics of Mnuchin’s approach argue that U.S. accounting firms couldn’t vouch for the accuracy of the secondhand data they would get to review.
In coming weeks, Securities and Exchange Commission Chair Jay Clayton may bring Mnuchin’s more flexible approach up for a commission vote.
But the big question is what Janet Yellen, the incoming Treasury secretary, and President-elect Joe Biden think.
