SARATOGA N.Y., – Today, House Republican Chairwoman Elise Stefanik introduced two critical pieces of legislation to increase transparency and protect American investors from the growing threat of the capabilities of our adversaries, such as the Chinese Communist Party (CCP). Senator Rick Scott (R-FL) introduced companion measures in the Senate.
“I am proud to introduce the American Investment Accountability Act and the Trusted Foreign Auditing Act to ensure accurate and timely information on the true scope and nature of financial transactions encompassing Communist China and other adversarial countries,” said Chairwoman Stefanik. “We must have greater visibility into how U.S. investments are strengthening the capabilities of our adversaries and prevent Chinese companies from sidestepping Western auditing standards.”
“The Chinese Communist Party is actively waging economic warfare against the United States, using compromised auditors and deceptive financial tactics to infiltrate our markets and undermine our national security. These CCP-linked firms continue to evade oversight by U.S. regulators or follow the same reporting and accountability standards required of U.S. companies to intentionally deceive American investors and capitalize off their dollars. I am glad to lead the Trusted Foreign Auditing Act and American Investment Accountability Act with Representative Elise Stefanik to expose and block these threats by cracking down on corrupt auditors and forcing transparency on U.S. investments tied to hostile regimes like Communist China to ensure American taxpayer funds no longer props up our adversaries. It's time to end the CCP’s backdoor access to our economy and defend the integrity of our financial system,” said Senator Scott.
The first piece of legislation, the American Investment Accountability Act, will increase visibility into how U.S. investments are contributing to the advancement of our adversaries’ capabilities.
The American Investment Accountability Act would require:
- Treasury to report on portfolio investments that exceed $10 million in a single transaction or $25 million in aggregate;
- Commerce to report on direct investments that exceed $5 million in a single transaction or $10 million in aggregate;
- Both Treasury and Commerce to apply national corrections to their data to monitor the true level of investment into countries of concern;
- Both Treasury and Commerce to breakdown investment flows by economic sector and disclose investments into sanctioned entities; and
- The SEC to report joint ventures, mergers and acquisitions, spin-offs, and greenfield investments into countries of concern.
Additionally, the Trusted Foreign Auditing Act will protect U.S. investors and capital by requiring Chinese companies to use independent auditors not controlled by the Communist Party.
These two bills underscore Chairwoman Stefanik and Senator Scott’s commitment to protecting American investors and national security against the malign influence of the CCP.
Background:
In years past, companies based in the People’s Republic of China (PRC) that are listed on U.S. stock exchanges have failed to comply with U.S. securities law. In response, Congress passed the Holding Foreign Companies Accountable Act, requiring China-based companies to make their audits available to U.S. inspectors or else be delisted from U.S. stock exchanges.
In turn, Chinese firms began using dishonest auditors with ties to the Chinese Communist Party in an attempt to sidestep the law. The Public Company Accounting Oversight Board (PCAOB) found these auditors were not meeting American auditing standards.
