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Bill Targeting Chinese, Other Foreign Firms Listed On US Exchanges Introduced

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A bipartisan Bill that has provisions to ban Chinese and other foreign firms listed on US exchanges that do not comply with the country's regulations has been introduced in the Congress.

The legislation, titled "Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (EQUITABLE) Act", was introduced in the Senate by Senators Marco Rubio (R-FL), Bob Menendez (D-NJ), Tom Cotton (R-AR) and Kirsten Gillibrand (D-NY), while Representatives Mike Conaway (R-TX), Tim Ryan (D-OH), and Mike Gallagher (R-WI) tabled the companion bill in the House on Wednesday.

The law, if passed, empowers the government to increase oversight of Chinese and other foreign companies listed on American exchanges and delist firms which are not in compliance with U.S. regulators for a period of three years.

The law will force the Chinese government, which currently blocks US regulators from viewing the full audit reports of publicly traded companies headquartered in Hong Kong and mainland China, to change behavior, the lawmakers said in a joint statement.

The EQUITABLE Act will better inform investors about their exposure to financial risks, delisting non-compliant issuers of securities, and ban of Chinese and other foreign firms that flaunt investor protections and regulatory norms from entering U.S. capital markets.

Conaway said that the Chinese Communist government consistently manipulates US law and regulations to protect their companies from being held to basic global accounting standards, creating unfair advantages and further encouraging corrupt behavior.

Cotton said that if foreign companies want to stay on American exchanges, they need to abide by the same rules everyone else does. Our bill would ensure that foreign companies traded on U.S. stock exchanges provide regulators with information already required by law.

In Gillibrand's opinion, if China refuses to comply with international norms of transparency, then its companies should not have access to the U.S. market.

According to the U.S.-China Economic and Security Review Commission data, 156 Chinese companies, including 11 state-owned, are listed on three largest US exchanges with a combined market capitalization of $1.2 trillion.

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