Gensler Warns of Chinese Company Risks Following SEC Crackdown By Bloomberg

(Bloomberg) — U.S. Securities and Exchange Commission Chair Gary Gensler issued his most direct warning on Monday about the risks of investing in Chinese companies.

Gensler said in a video message that there is a lot that American investors don’t know about some Chinese companies that are listed on U.S. stock exchanges. His remarks come just weeks after the regulator halted initial public offerings of Chinese companies until they boost disclosures.

“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,” Gensler said in the video.

Gensler said that he’s asked SEC staff to take “a pause for now” in green-lighting IPOs of shell companies that Chinese firms use to list shares in the U.S. and wants investors to have more information. He also repeated his warning that U.S. officials must be allowed to inspect Chinese firms’ financial audits.

His comments come amid a crackdown in China on private industry, including moves by Beijing to ban a swath of private-education firms from making profits. The actions have triggered a dramatic selloff in shares as investors reassess how far the government will go in tightening its grip on the economy.

©2021 Bloomberg L.P.