Chairmen Moolenaar and Scott Call on SEC to Delist CCP-Linked Companies from U.S. Markets

In a joint effort, Chairman Moolenaar of the House Select Committee on China and Chairman Rick Scott of the Senate Committee on Aging have taken steps to address national security and investor protection concerns by urging the Securities and Exchange Commission (SEC) to delist Chinese companies linked to the Chinese Communist Party (CCP) from U.S. markets. This move comes in response to the growing influence of Chinese companies like Alibaba, Baidu, Hesai, and Zeekr that utilize American capital markets to advance the strategic interests of the CCP, including military advancement, surveillance, and coerced labor.

Chairman Moolenaar emphasized that these Chinese firms are not merely commercial entities but serve as means for the CCP to undermine American interests. The call for action from the SEC stems from the need to safeguard American investors and national security interests against the potential risks posed by these companies.

The implications of these CCP-linked companies on American investors are significant. Many U.S.-listed Chinese companies, including prominent names like Alibaba, JD.com, and Tencent Music, have ties to the Chinese military or are deeply entwined in China’s surveillance infrastructure. Despite the potential financial implications, the majority of Americans with retirement accounts are unaware that their investments may be funding these companies.

Moreover, these Chinese companies often operate opaquely, using complex shell structures to mask ownership and evade audits, leaving American investors uninformed and exposed to potential risks. Additionally, some of these entities are complicit in human rights violations and forced labor practices in regions like Xinjiang and contribute technology for the Chinese government’s surveillance apparatus, impacting Uyghurs and other marginalized communities.

Not only do these companies present ethical concerns, but they also pose risks to U.S. national security. Some Chinese firms listed on U.S. exchanges have been involved in developing weaponry for the People’s Liberation Army (PLA), supporting drone warfare, and facilitating cyberattacks on American infrastructure, highlighting the multifaceted threats they pose.

In light of these pressing issues, the Committee urged the SEC to utilize existing mechanisms such as the Holding Foreign Companies Accountable Act and pertinent sections of the Securities Exchange Act to suspend or eliminate companies that fail to comply with U.S. regulations intentionally. Immediate action is necessary to prevent U.S. markets from inadvertently fueling the ambitions of a strategic adversary like China.

The joint letter signed by bipartisan members of both chambers underscores the broad support for addressing this issue and outlines specific steps that the SEC can take to safeguard U.S. investors and national security interests. The detailed profiles of CCP-linked firms provided in the letter highlight the urgency of the situation and the necessity of proactive measures to mitigate risks associated with these companies.