U.S. Preparing to Scrap Securities Information-Sharing Agreement with China
What’s new: The administration of U.S. President Donald Trump is planning to scrap a 2013 agreement between securities regulators in the U.S. and China aimed at facilitating better oversight of Chinese firms listed in the U.S., Reuters reported on Tuesday.
“The action is imminent,” Keith Krach, undersecretary for economic growth, energy and the environment told Reuters in an emailed response to questions. “This is a National Security issue because we cannot continue to afford to put American shareholders at risk, to put American companies at a disadvantage, and allow our preeminence of being the gold standard for financial markets to erode.”
Background: The agreement between the Public Company Accounting Oversight Board (PCAOB), which is closely tied to the U.S. securities regulator, and China’s securities regulator was heralded as a landmark deal when it was reached in 2013.
It paved the way for the PCAOB to get access to China-based accounting documents for New York-listed Chinese firms whose audits were previously beyond the reach of U.S. investigators when they suspected fraud. But the PCAOB has complained of China’s frequent failure to grant such requests, making the agreement of little use, Reuters reported.
Cancellation of the agreement would come against a backdrop of growing calls by U.S. politicians and regulators to make U.S.-listed Chinese companies — long beyond the reach of U.S. fraud investigators —subject to the same regulatory oversight as their American peers.
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