The Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler, has told SEC staff to “pause” the initial public offerings (IPOs) of shell companies that are commonly used by Chinese firms to list in the country, reports Caixin.
In a video posted on his Twitter account Monday, Gensler said that he has asked SEC staff to require such companies to provide full and fair disclosure that what US investors are investing in is actually a shell company in the Cayman Islands or another part of the world.
“That means disclosing the political and regulatory risk that the government of China could, as they’ve done a number of times recently, significantly change the rules in the middle of the game for that operating company in China,” he said.
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