U.S. Secretary of State Mike Pompeo emphasized his commitment to protect U.S. investors from fraudulent companies linked to the Chinese Communist Party (CCP).
These types of companies do not comply with the same rules as U.S. companies and also pose a risk to national security, Pompeo argued in a press release on June 4.
“American investors should not be subjected to hidden and undue risks associated with companies that do not abide by the same rules as U.S. firms,” Pompeo said.
He praised the requirements set by Nasdaq, one of the major New York stock exchanges, for compliance with strict international auditing standards by all companies listed on its financial market.
“Nasdaq’s action should serve as a model for other exchanges in the United States, and around the world,” Pompeo also recommended.
Given the hidden risks involved in companies under the CCP because of their lack of transparency and even their false financial statements, President Donald Trump stopped the large investments of federal employee retirement funds in those companies.
At least the Chinese coffee shop chain Luckin Coffee, which offered its shares in the United States in early 2019, was discovered to have fraudulent sales agreements between its chief operating officer and other employees when an investigation was conducted.
“The real issue is the lack of transparency and the lack of disclosure to the American investors,” said Keith Krach, the U.S. State Department’s assistant secretary for economic growth, energy, and the environment, according to Reuters.
The U.S. Securities and Exchange Commission (SEC) has been fighting with the CCP for about 10 years to gain access to audits of its listed companies.
The law repressing the freedoms and autonomy of Hong Kong’s inhabitants, recently passed by the CCP, has President Trump considering dismantling the economic privileges granted to many of the city’s economic activities, which the CCP takes advantage of.
There has been serious backlash to the CCP’s handling and coverup of the CCP virus outbreak, as well as its violation of the international treaty protecting Hong Kong, and many conflicts with other countries.
The CCP has already been identified as an international threat, and protective measures have been taken to minimize this risk, including the creation of the new Inter-Parliamentary Alliance on China (IPAC), in which nine countries participate.
IPAC would work to implement international standards to maintain world order, defend human rights, promote trade equity, develop security strategies, and protect national sovereignties, according to its website.
Specifically, IPAC seeks to: “Take a tougher stance on the Chinese Communist Party.”