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Nisha Gopalan

Nasdaq's China Crackdown Looks Halfhearted

The exchange’s tightened rules on initial public offerings wouldn’t have excluded one scandal-hit company.

Small one, to go.

Small one, to go.

Photographer: WANG ZHAO/AFP/Getty Images

Nasdaq is tightening rules on initial public offerings in an effort that looks to be targeted primarily at Chinese companies. To appreciate just how tepid its proposals are, consider this: They wouldn’t have screened out Luckin Coffee Inc., the most notorious accounting scandal involving a U.S.-listed Chinese issuer in years. On this evidence, IPO hopefuls have little to worry about — as long as they’re not too small.

Companies will need to raise at least $25 million, or sell stock equal to a minimum 25% of their post-listing market capitalization, according to a Bloomberg News report that cited Nasdaq filings with the Securities and Exchange Commission. Luckin sold $645 million of shares in its IPO last May.