There is also the fact that many of the companies listed on U.S. exchanges are in part owned by the Chinese government. If you think those companies are going to abide by findings of independent auditors when things don't go well, naïveté will not be your friend. See the attached link for lists of companies that have Chinese government ownership.
Think Twice before Buying Chinese Stocks
The Trump administration recently floated the idea of delisting Chinese stocks in the U.S. This was met with ridicule and hand-wringing not only from the usual political opponents, but also from mainstream business analysts.
Though delisting Chinese companies already listed on U.S. exchanges is problematic, there are good reasons besides being a bargaining chip in the trade dispute why the U.S. should be more stringent about any Chinese company listing on U.S. exchanges.
The Wall Street Journal in a recent editorial sums up the consensus view on Chinese companies:
One benefit of listing on U.S. exchanges is that it obliges foreign firms to meet American regulatory standards for disclosure to investors. The White House would not be protecting American investors by forcing Chinese companies to list on foreign stock exchanges where the rules are less rigorous.
The current situation is good for Chinese companies and the exchanges that collect nice fees. The large venture capital and hedge funds that own large pieces of Chinese companies (at pre-listed prices) also benefit from having a liquid market in their local currency. But for the average American investor, this is a great example of the connected class benefiting at the expense of the average investor.
The "disclosure" that the WSJ references is little more than window dressing. The NYSE rules (other exchanges are similar) for listing state very clearly (emphasis added):
Foreign Private IssuersListed companies that are foreign private issuers (as such term is defined in Rule 3b-4 under the Exchange Act) are permitted to follow home country practice in lieu of the provisions of this Section 303A, except that such companies are required to comply with the requirements of Sections 303A.06, 303A.11 and 303A.12(b) and (c).
And what are the other requirements in the above referenced to?
303A.06 Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.
Rule 10A-3 was put into place in 2003 to help strengthen independent auditing. On the face, it sound good, but there is a glaring loophole:
Accordingly, an issuer either may have a separately designated audit committee composed of members of its board or, if it chooses to do so or if it fails to form a separate committee, the entire board of directors will constitute the audit committee. If the entire board constitutes the audit committee, the new SRO rules adopted under Exchange Act Rule 10A-3, including the independence requirements, will apply to the issuer's board as a whole[.]
In the U.S., many boards are no more than rubber stamps for the CEO. In China, it is not at all different. The aforementioned rule basically says the board can audit itself.
303A.11 Foreign private issuers must make their U.S. investors aware of the significant ways in which their corporate governance practices differ from those required of domestic companies under NYSE listing standards. However, foreign private issuers are not required to present a detailed, item-by-item analysis of these differences[.] [Emphasis added.]
303A 12 b and c are toothless notification requirements.
In December 2018, the Securities Exchange Commission (SEC) and Public Company Accountability Oversight Board (PCAOB) said, "A U.S. listing carries with it the assumption that U.S. rules and regulatory oversight apply." However, Chinese law requires that companies' books and records be kept within the country. It also restricts foreign audit work papers from being transferred outside China.
Another problem with Chinese companies listing on U.S. exchanges is that in many instances, the stock being offered has no ownership in the company. It is against Chinese law for foreigners to own strategic assets in the country. So in the case of Alibaba and other companies, investors actually own a stake in a Cayman Islands company that is under contract to receive profits from the Chinese parent but does not actually own any part of the company.
So good luck if you want to sue a Chinese company. You will need to file suit against a company based in the Caymans, who has a contract with a company in China, where there is no rule of law close to what we accustomed to in the U.S.
There is also the fact that many of the companies listed on U.S. exchanges are in part owned by the Chinese government. If you think those companies are going to abide by findings of independent auditors when things don't go well, naïveté will not be your friend. See the attached link for lists of companies that have Chinese government ownership.
In summary, at one time, it may have been a good idea to open up our exchanges to Chinese companies in the hope they would become more democratic or Western in their legal and political system. The last ten years should have disabused us of that notion. We do not need to have stock listings with companies from countries that do not adhere to U.S. law. Let's be clear-eyed about what we are confronting and not let the status quo become the norm.
FEINSTEIN HAS SPENT HER POLITICAL LIFE STALKING THE HALLS OF CONGRESS SNIFFING OUT DEALS THAT PUT HUNDREDS OF MILLIONS IN HER POCKETS.
Senator
Who Employed Chinese Spy Endorses Joe Biden for President
A high-profile U.S. senator with professional and personal ties to
China — including once employing one of its spies — is backing former Vice
President Joe Biden amid mounting questions over his son’s business dealings
with the communist regime.
FEINSTEIN HAS SPENT HER POLITICAL LIFE STALKING THE HALLS OF CONGRESS SNIFFING OUT DEALS THAT PUT HUNDREDS OF MILLIONS IN HER POCKETS.
SHE HAS
AVOIDED PROSECUTION BY VOTING AGAINST ANY ETHICS BILLS AND HER HUSBAND, RICHARD
BLUM'S HANDING OUT "CAMPAIGN CONTRIBUTION" BRIBES TO EVERY DEMOCRAT
OUT THERE!
*
IN THE
November 2006 election, the voters demanded congressional ethics reform. And
so, the newly appointed chairman of the Senate Rules Committee, Dianne
Feinstein, D-Calif., is now duly in charge of regulating the ethical behavior
of her colleagues. But for many years, Feinstein has been beset by her own
ethical conflict of interest, say congressional ethics experts.
“All in all, it was an
incredible victory for the Chinese government. Feinstein has done more for Red
China than other any serving U.S. politician. “ Trevor Loudon
“Our entire crony
capitalist system, Democrat and Republican alike, has become a kleptocracy
approaching par with third-world hell-holes. This is the way a great
country is raided by its elite.” ---- Karen McQuillan AMERICAN
THINKER.com
Senator
Who Employed Chinese Spy Endorses Joe Biden for President
Win
McNamee/Getty Images
9 Oct 20192,419
5:44
A high-profile U.S. senator with professional and personal ties to
China — including once employing one of its spies — is backing former Vice
President Joe Biden amid mounting questions over his son’s business dealings
with the communist regime.
Sen. Dianne Feinstein (D-CA), a
former chairwoman of the Senate Intelligence Committee, announced her
endorsement of the former vice president on Tuesday, claiming to have
witnessed Biden’s “fortitude” and leadership during their overlapping tenures
in Congress.
I’ve worked closely with Vice
President Biden and I’ve seen firsthand his legislative ability, his
statesmanship, and most importantly his moral fortitud. During his time in
Congress and in the White House, Joe Biden has been a tireless fighter for hard
working American families.
The endorsement comes as Biden’s
presidential campaign is besieged by scandal regarding the lucrative business
dealings his youngest son, Hunter, had with foreign governments.
Only hours before Feinstein’s
endorsement, the Chinese government announced it would not
investigate how Hunter Biden ended up at the center of one its top private
equity firms. The Chinese foreign ministry made the decision after President
Donald Trump publicly called for a probe of Hunter Biden’s dealings with Bohai Harvest
RST (BHR). In particular, Trump has noted that the circumstances surrounding
BHR’s creation could have posed a conflict of interest for Joe Biden.
As Peter Schweizer, senior
contributor at Breitbart News, revealed in his bestselling book Secret Empires: How the American Political
Class Hides Corruption and Enriches Family and Friends, Hunter
Biden inked the multibillion-dollar deal that created BHR with a subsidiary of
the state-owned Bank of China in 2013.
The timing of the lucrative deal has
been brought into question as it came only 12 days after Hunter visited China
with his father aboard Air Force Two. Officially, the then-vice president
was visiting the country amid escalating tensions over islands in the South
China Sea and decided to bring his granddaughter and son along. In a March
2018 interview with Breitbart News Tonight,
however, Schweizer detailed the political machinations that preceded Hunter
Biden’s $1.5 billion venture with China:
In December of 2013, Vice President
Joe Biden flies to Asia for a trip, and the centerpiece for that trip is a
visit to Beijing, China. To put this into context, in 2013, the Chinese have
just exerted air rights over the South Pacific, the South China Sea. They
basically have said, ‘If you want to fly in this area, you have to get Chinese
approval. We are claiming sovereignty over this territory.’ Highly
controversial in Japan, in the Philippines, and in other countries. Joe Biden
is supposed to be going there to confront the Chinese. Well, he gets widely
criticized on that trip for going soft on China. For basically not challenging
them, and Japan and other countries are quite upset about this.
Since its creation, BHR has invested
heavily in energy and defense projects across the globe. As of
June, Hunter Biden was still involved with BHR,
sitting on its board of directors and owning a minority stake of the fund
estimated to be worth more than $430,000.
Such dealings at the center of
politics and business, while perhaps not illegal, are not exclusive to the
Biden family alone. As a few noted at the time of Feinstein’s endorsement, the
senator and her husband have their own close ties to the communist country.
During her tenure as mayor of San
Francisco in the late-1970s and early-1980s, Feinstein took advantage of the
newly normalized diplomatic relations between the U.S. and China by
establishing one of the first sister city partnership between San Francisco and
Shanghai. Through that partnership, Feinstein led trade delegations to China in
which she and her husband, Richard Blum, became acquainted with some of the
country’s most prominent political leaders.
As the Federalist noted in August 2018, Feinstein
and her husband leveraged those relationships to boost their own wealth. In
1986, Feinstein and Jiang Zemin — the then-mayor of Shanghai, who would later
ascend to the presidency of the People’s Republic of China — “designated
several corporate entities for fostering commercial relations.” One of those
firms was Shanghai Pacific Partners, which employed Blum as a director. Blum
reportedly had an interest of upwards of $500,000 in a project backed by
Shanghai Pacific Partners.
After Feinstein was elected to the
Senate in 1992, Blum continued profiting off their ties to China. A the same
time, the freshman lawmaker was pitching herself as a “China hand” to
colleagues, even once claiming “that in my
last life maybe I was Chinese.” Through her seat on the Senate Foreign
Relations Committee, Feinstein led the fight on a number of initiatives seen as
being favorable to China, including granting the country permanent
most-favored-nation trading status in 2000.
Despite Feinstein and her husband
having a close relationship with Jiang, the Chinese government targeted the senator
as part of its espionage operations. In the early 2000s, the Chinese Ministry
of State Security (MSS) recruited a longtime employee of the senator to gather
information about the inner workings of her congressional and district offices.
Feinstein only learned of the staffer’s duplicity in 2013, after he’d already
been on her payroll for more than 20 years.
“While this person, who was a
liaison to the local Chinese community, was fired, charges were never filed
against him,” Politico reported in 2018,
speculating that because “the staffer was providing political intelligence and
not classified information—making prosecution far more difficult.”
Apart from the convoluted history of
the senator’s ties to China, the political timing of Feinstein’s endorsement
also caught many off guard. The California Democrat, who hosted a
fundraiser on Biden’s behalf last week alongside House Speaker
Nancy Pelosi’s (D-CA) daughter, is only the most recent figure from the
Democrat establishment to openly pledge support for the former vice president.
Feinstein’s endorsement, however, was not totally expected, especially since
her seamate, Sen. Kamala Harris (D-CA), is mounting a bid of her own for the
Democrat nomination. In fact, earlier this year, Feinsten flirted with the
notion of remaining neutral in the 2020 contest out of respect for Harris.
Compounding the political picture is
that most polls show Biden no longer the favorite to win California,
having fallen behind Sen. Elizabeth Warren (D-MA).
Feinstein, however, did not address
any of that when endorsing the former vice president on Tuesday. Instead, the
senator offered platitudes about Biden’s work to enhance gun control and how
his campaign was a “fight to restore the soul of the nation.”
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