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Following two bills introduced this year over concerns by lawmakers over U.S. investments in China, lawmakers from both parties sent a joint letter to the Securities and Exchange Commission on May 2, calling on the SEC to delist companies allegedly linked to the Chinese Communist Party, including Alibaba, Hesai and Baidu, citing U.S. market and investor security.
The chair of the House Select Committee on the Chinese Communist Party, John Moolenaar, and the chair of the Senate Special Committee on Aging, Rick Scott, and eight other members of Congress wrote to SEC chair Paul Atkins to take action against 25 Chinese groups, listed on U.S. exchanges.
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“These companies are not just commercial entities; they are instruments of the Chinese Communist Party's broader strategy to undermine U.S. interests," said Chairman Moolenaar. "The SEC must act decisively to protect American investors and national security."
"These entities benefit from American investor capital while advancing the strategic objectives of the Chinese Communist party. . . supporting military modernization and gross human rights violations," read the letter. "They also pose an unacceptable risk to American investors."
The lawmakers said that the Chinese companies were "ultimately harnessed for nefarious state purposes,"no matter how commercial they appeared on the surface,” wrote the lawmakers. The Committee urged “immediate enforcement” of the SEC to act under the Holding Foreign Companies Accountable Act of the Securities Exchange Act to suspend or delist entities that cannot comply with U.S. law by design.
According to the congressional letter, “American investors—often unknowingly—are financing firms that support the CCP’s military expansion, internal security campaigns, and authoritarian governance model.”
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In March, Senator Jim Banks (R-IN) introduced the Protecting Americans’ Retirement Savings Act that would ban 401(k) funds from investing in China and Representative Andy Barr (R-KY) introduced the Foreign Investment Guardrails to Help Thwart China Act that would “protect the national security of the United States by imposing sanctions with respect to certain persons of the People’s Republic of China.”
“This is not just a transparency issue; it is a matter of national security,” reads the letter to the SEC.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
