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The Senate passed the Holding Foreign Companies Accountable Act on May 20, dropping a bomb on the Chinese stock market. The lawmakers who initiated the bill expressed hope that it would help prevent Chinese companies from committing fraud in the United States.The Holding Foreign Companies Accountable Act, sponsored by Republican Senator John Kennedy and Democratic Senator Chris Van Hollen, was passed by unanimous consent on May 21. According to the Act, securities of a company are prohibited from being listed on any of the U.S. securities exchanges if the company has failed to comply with the Public Company Accounting Oversight Board’s (PCAOB) audits for three years in a row. Specifically, the bill requires a company to prove it’s not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign accounting firm not subject to inspection by the board.
