GOP Sen. John Kennedy is urging federal regulators to fully implement a law that requires foreign companies to meet U.S. accounting standards while trading on American exchanges. However, the Security and Exchange Commission could delay its implementation.
The law enacted in December 2020 by then-President Trump and protects U.S investors from foreign companies but is mainly aimed at Chinese firms that engage in fraudulent practices.
If foreign companies fail to comply with the law – the Holding Foreign Companies Accountable Act – they are delisted from U.S. exchanges.
The SEC on March 18 adopted interim rules to implement certain provisions of the law, according to The Epoch Times. The agency listed 2022 as the start date for implementing the law, delaying the possible delisting of Chinese companies.
In a letter to the SEC on Wednesday, Kennedy, of Louisiana argued the delay could further expose American investors to possible fraud by Chinese companies.
“Countless Chinese companies defrauded investors – most notably Luckin Coffee, which lost half of its stock valuation overnight,” Kennedy wrote. “Because this threat to our capital markets system remains, the commission should act swiftly to identify non-compliant companies that are located in a foreign jurisdiction.”
Nasdaq last year delisted Luckin Coffee for allegedly intentionally overstating its sales, causing stock prices to crash.