SEC Must Swiftly Implement Holding Foreign Companies Accountable Act

ASA urges SEC to include FY 2020 financial statements, not prolong American investor exposure to fraudulent Chinese companies.

WASHINGTON – The American Securities Association (ASA) today sent a letter to the Securities and Exchange Commission (SEC) urging the Commission to swiftly and fully implement the Holding Foreign Companies Accountable Act, bipartisan legislation sponsored by Sens. Kennedy (R-LA) and Van Hollen (D-MD), that unanimously passed Congress and was signed into law last year. In its letter, ASA commended the Commission for acting on this economic and national security priority, and urged the PCAOB and SEC to include fiscal year 2020 audits in their determination of “non-inspection years” for issuers.

“Loopholes and exemptions in U.S. law have allowed the savings of American investors to fund Chinese companies that are outright frauds, arms of the Chinese Communist Party, or engaging in activities that are hostile to American interests for far too long,” ASA CEO Chris Iacovella wrote in the letter. “Until something changes, Wall Street will continue to push questionable Chinese companies into our markets, and those companies will continue to pose a major risk to American retirees and savers.”

“The SEC should make clear that annual reports filed in 2021 which include financial statements for the fiscal year ended December 31, 2020 would be the first eligible non-inspection year for an issuer,” Iacovella wrote. “Delaying this determination into 2022 would be contrary to Congressional intent and unnecessarily prolong American investors exposure to fraudulent Chinese companies. Hard-earned American investor dollars cannot continue to flow into the black box that is Communist China.”

Additionally, ASA recommended the SEC publish a list of Commission-Identified Issuers on its website and issue alerts for investors regarding the risk of investing in U.S.-listed Chinese companies, and called for margin trading of Commission-Identified Issuers to be prohibited.

For years, ASA has been at the forefront of advocacy to end China’s fraud on our markets. In March, ASA submitted testimony ahead of a U.S. – China Economic and Security Review Commission hearing on U.S. investment in China’s capital markets and military-industrial complex. In December, ASA penned a Letter to the Editor of the Wall Street Journal calling for real audits for Chinese firms. To read ASA CEO Iacovella’s op-ed in RealClearPolitics, click here.

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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.