Press releases

WASHINGTON – Sens. John Kennedy (R-La.) and Dan Sullivan (R-Alaska), along with five of their Senate colleagues, sent a letter to Chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler following the initial public offering (IPO) by the Chinese vehicle-for-hire company Didi and the Chinese Communist Party’s (CCP) enforcement actions against Didi.

The senators urged Gensler to enforce the Holding Foreign Companies Accountable Act and start thorough investigations of potentially fraudulent Chinese Companies listed on U.S. stock exchanges.

“As an illustration of our concern, the Chinese ride-hailing company, Didi Global Inc. recently held its initial public offering (IPO) on the New York Stock Exchange (NYSE). Prior to the offering, Didi officials and executives downplayed the risks of imminent Chinese regulation in its IPO prospectus filed at the SEC despite news reports that the CCP warned Didi officials to delay the IPO. . . . Immediately following the IPO, the CCP’s cyber arm, the Cyberspace Administration of China (CAC), opened an investigation into Didi claiming that the company violated Chinese privacy and national security laws. . . . Resulting from this CAC crackdown, Didi’s stock price plummeted only two days after its IPO. The timing of the CAC investigation conveniently occurred after the company was able to snatch billions of dollars from American investors,” the senators wrote.

“The Didi IPO also highlights the troubling trend of Chinese companies taking advantage of our capital markets while ignoring the transparency that is required under U.S. law to access U.S. markets. According to the U.S.-China Economic and Security Review Commission, as of October 2020 there were 217 Chinese companies listed on U.S. exchanges, including 13 companies that are claimed by the CCP as Chinese state-owned enterprises. We have serious doubts that these companies are in compliance with U.S. transparency requirements,” the senators continued.

“All of this requires the SEC to get much more serious and focused on U.S. listed Chinese companies, starting with the full enforcement of the Holding Foreign Companies Accountable Act that became law last year after passing both chambers of Congress unanimously. This law will delist Chinese companies that do not comply with Public Company Accounting Oversight Board inspections within three years. The SEC should recognize the urgency of implementing this law and begin counting compliance years now. Congress has already recognized this urgency and is currently considering accelerating this law’s compliance shot clock,” the senators continued.

The senators recommended that, to combat the threat of fraudulent Chinese companies, the SEC should also:

  • Launch investigations into Chinese companies, like Didi, and their underwriters to combat potential fraud and reporting oversights.
  • Investigate the potential risks that certain Chinese-controlled shell companies pose to U.S. investors.
  • Consider cooperative efforts among American, European and Japanese stock exchanges to prevent prospective or delisted Chinese companies from working their way into other prominent markets.
  • Investigate index providers doing business in the U.S. that continue to add Chinese companies to their products despite these companies’ lack of transparency.

Sens. Marsha Blackburn (R-Tenn.), Tom Cotton (R-Ark.), Kevin Cramer (R-N.D.), Bill Hagerty (R-Tenn.) and Rick Scott (R-Fla.) joined Kennedy and Sullivan on the letter.

Text of the letter is available here.


Last December, the president signed into law Kennedy’s Holding Foreign Companies Accountable Act, which prohibits a company from being listed on any of the U.S. securities exchanges if the company has failed to comply with the Public Company Accounting Oversight Board’s (PCAOB) audits for three years in a row.

Many Americans invest in U.S. stock exchanges as part of their retirement and college savings, and dishonest companies operating on the exchanges put Americans’ investments at risk. This legislation protects the interest of hardworking American investors by ensuring that foreign companies traded in America are subject to the same independent audit requirements that apply to their competitors in America and other countries.

This June, the Senate also passed Kennedy’s Accelerating Holding Foreign Companies Accountable Act, which would put additional pressure on China by requiring foreign companies to comply with PCAOB audits within two consecutive years instead of three. This would help remove fraudulent and non-compliant companies from U.S. exchanges more quickly.