Chinese stocks fell after SEC identified Chinese firms that could face delisting from US exchanges for non-compliance, according to a report by MarketsInsider on Thursday.
- The Holding Foreign Companies Accountable Act became operative on December 18, 2020.
- The Act requires the SEC to identify publicly traded foreign companies on US exchanges that would not allow US auditors to inspect their financial records and books.
- The new law gives SEC the power to delist Chinese stocks if for three consecutive years they do not allow a US accounting firm to perform an audit of its financial statements.
- China’s Baidu is the recent high-profit Chinese company flagged by the US SEC for its non-compliance with the law. Shares of Baidu dropped nearly 3% immediately after the SEC’s notice.
Meanwhile, Baidu plans to comply with the new law. The company stated that it would continue to comply with relevant laws and regulations in both China and United States. BIDU: NASDAQ is down -6.17%