The U.S. Senate advanced Tuesday legislation designed to increase accountability for foreign companies that refuse to submit to U.S. financial oversight.
The Accelerating Holding Foreign Companies Accountable Act would require foreign companies to comply with Public Company Accounting Oversight Board (PCAOB) audits within two consecutive years instead of three. This would help remove fraudulent and non-compliant companies from U.S. exchanges more quickly.
Further, the bill would apply the Holding Foreign Companies Accountable Act to Chinese companies that use audit firms in Taiwan or Singapore and do not comply with PCAOB inspections because of Chinese law.
“When foreign companies flout America’s security laws, they put Americans’ retirement plans and savings at risk. China is bent on exploiting American investors, so we need more accountability for foreign companies using American capital, and we need it now. I’m pleased to see the Senate take a huge step today by voting to give the SEC the ability to kick fraudulent Chinese companies off U.S. exchanges more quickly. I hope the House sends this common-sense bill to the president’s desk before foreign companies swindle more workers and families here at home,” Sen. John Kennedy (R-LA), who introduced the bill, said.
Congress established the PCAOB to inspect audits of public companies, ensuring the information companies provide to the public is accurate and independent. However, China refuses to allow the PCAOB to inspect audits of companies registered in China and Hong Kong. Other countries do as well. According to the Securities and Exchange Commission, 224 U.S.-listed companies are located in countries where there are obstacles to PCAOB inspections.