Bloomberg reported that, on August 16, Gary Gensler, chairman of the U.S. Securities and Exchange Commission, said in a video message that American investors knew very little about some Chinese companies listed on stock exchanges in the US. He has asked SEC staff to temporarily suspend IPOs of shell companies by Chinese companies, and encourages investors to learn more about these companies’ structures.
In the video, Gary Gensler reiterated the demand that U.S. officials must be allowed to examine financial audits of Chinese companies. “If auditors of do not disclose their books and records within the next three years, companies registered in the Cayman Islands or China will not be able to list in the US.”
Reuters reported on July 30th that the SEC has suspended “the registration of IPO and other securities sales of Chinese enterprises in the US”. Considering the latest news in China and the overall risks of China’s VIE structure, Gary Gensler has now asked the SEC to request for additional information disclosures for overseas issuers related to companies operating in China before they go public in the US through VIE.