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How the U.S. Is Moving Closer to Delisting Chinese Firms

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China Removes Key Hurdle to Allow U.S. Full Access to Audits
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Some big-name Chinese stocks including Alibaba Group Holding Ltd. and Baidu Inc. face the prospect of getting kicked off the New York Stock Exchange and Nasdaq if they refuse to let US regulators see their financial audits. The US Securities and Exchange Commission has started the process, compelled by a 2020 law, and investors have started to pay attention. So has China, which has moved to potentially clear a big hurdle that stymied US regulators for years. 

The 2002 Sarbanes-Oxley Act, enacted in the wake of the Enron Corp. accounting scandal, required that all public companies have their audits inspected by the US Public Company Accounting Oversight Board. According to the SEC, more than 50 jurisdictions work with the board to allow the required inspections, while two historically have not: China and Hong Kong. The long-simmering issue morphed into a political one as tensions between Washington and Beijing ratcheted up during the administration of President Donald Trump. The Chinese chain Luckin Coffee Inc., which was listed on Nasdaq, was found to have intentionally fabricated a chunk of its 2019 revenue. The following year, in a rare bipartisan move, Congress moved to force action.