China, US Move to Ease Confidence Crisis 中美合作解决在美上市中国企业的信任危机

By newsdoug on July 6, 2011

Stopping the China stock confidence crisis China and US are finally taking some concrete steps to address the ongoing confidence crisis in US-listed Chinese stocks, amid the latest fall-out at Longtop (NYSE: LFT), the firm whose ongoing accounting scandal in many ways precipitated the crisis. Foreign media are reporting that officials from the US and Chinese securities regulators will meet in China next week to discuss taking the unprecedented step of giving the US Securities and Exchange Commission authority to launch investigations of companies whose main listing is in the United States, even if their primary operations are physically based in China. (English article) This kind of cooperation is sorely needed, as right now the SEC has very little authority to investigate these companies, including many very small ones with dubious finances that got their US listings through “back door” takeovers of existing shell companies. Knowing the US has greater authority to come into their China offices and check their books, and potentially work with Chinese officials to obtain search warrants, will make many of these companies think twice about pursuing a US listing if their finances aren’t in conformance with US standards. Meantime, the carnage continues at Longtop, whose CFO and auditor have already resigned in the scandal involving financial irregularities at the company. In the latest development, 3 of Longtop’s independent directors and members of its auditing committee have resigned, apparently even after the company asked them to stay. (company announcement) It’s not difficult to see why these 3 resigned, as this kind of independent director is exactly the type of person who should have spotted the irregularities much earlier and pointed them out to the company’s management and board. Still, their departure won’t do anything to help restore confidence in this badly troubled company anytime soon.

Bottom line: A meeting between US and Chinese securities officials could mark the first step in an unprecedented cross-border alliance needed to restore confidence in US-listed Chinese firms.

中美两国最终就解决在美上市的中国企业出现的信任危机开始采取某些实质性措施。最新爆出财务丑闻的东南融通金融科技<LFT.N>在很多方面加速了这一危机。外国媒体报导称，中美证券监管部门的官员下周将在中国会晤，就美国证券交易委员会(SEC)有权调查在美上市的中国企业(即便该公司的主要运营实际在中国)这一前所未有的措施进行讨论。类似的合作十分必要，因美国证交会基本无权调查这些企业，包括很多财务状况可疑、通过收购现存空壳企业等“走後门”方式在美上市的小企业。如果知道美国有更大权限调查这些中国企业、核查其财务状况，并可能与中国官员合作获得搜查许可，可能很多财务状况不达美国标准的企业便会在寻求在美上市时三思而行。同时，对东南融通金融科技的调查还在继续，该公司的首席财务官和审计师已经在这场财务违规丑闻中辞职。最新事态是，该公司的三名独立董事兼审计委员会成员已经请辞，即使公司再三挽留。不难看出，为什麽这三人会辞职，因作为独立董事本该很早就发现公司的违规行为，并报告给公司的管理层和董事会。当然，他们的离职并不会有助於这家陷入困境的企业尽早恢复信誉。

一句话：中美证券监管官员的会晤可能标志着中美就解决在美上市中国企业的信任危机问题上，迈出了前所未有的跨境合作第一步。