U.S. Senators Call for Probe Into Whether Didi Mislead Investors Before IPO

What’s new: U.S. senators from both sides of the aisle have called on the Securities and Exchange Commission (SEC) to investigate whether Didi Global Inc. misled investors prior to its New York initial public offering last week.

“American investors need confidence that the companies that list on U.S. exchanges are not engaging in fraud and should have access to information on the risks posed by investing in foreign companies — especially those influenced by foreign governments,” said Chris Van Hollen, a Democratic senator from Maryland, in a statement to CNN Business.

“The SEC must enforce its transparency and disclosure rules, and American investors need to be fully aware of the inherently different risks of investing in companies from non-market, government-controlled economies such as China,” said Bill Hagerty, a Republican senator from Tennessee who sits on the senate banking committee with Van Hollen, in a statement to the Financial Times.

The New York Stock Exchange and the SEC both declined Caixin’s requests for comment. Didi did not respond to an emailed request.

The background: China’s dominant ride-hailing company is facing at least half a dozen class action lawsuits in the U.S., with some alleging that the company failed to disclose that Chinese regulators had warned it to delay its IPO pending a security review of its Didi Chuxing app.

China’s internet regulator ordered app stores to remove Didi’s products on Sunday, citing legal violations on the collection and use of personal data. The move, which came after the regulator announced the security review on Friday, sent Didi’s share price plunging just days after it completed a $4.4 billion IPO.

White House Press Secretary Jen Psaki told reporters at a regular press conference on Thursday that it was “essential that all companies that list in the U.S. adhere to high standards of transparency and disclosure,” but did not say whether the Biden administration believed the SEC should investigate Didi, citing the body’s independence.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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