Chinese Tech Giant Baidu Added to SEC List, Faces Potential Delisting

By Rita Li
Rita Li
Rita Li
Rita Li is a reporter with The Epoch Times, focusing on U.S. and China-related topics. She began writing for the Chinese-language edition in 2018.
March 31, 2022 Updated: March 31, 2022

U.S.-traded internet giant Baidu Inc. is one of the latest companies, mostly China-based, to face possible delisting from U.S. stock exchanges unless they abide by auditing standards.

The Securities and Exchange Commission (SEC) added the search engine company on March 30 to its growing provisional list under the Holding Foreign Companies Accountable Act (HFCAA), along with four other firms.

The other firms are Tencent-backed online brokerage Futu Holdings Ltd., Chinese video-streaming platform iQiyi Inc., U.S. biopharmaceutical company CASI Pharmaceuticals Inc., and Chinese aquaculture firm Nocera Inc.

The commission-identified firms have until April 20 to submit evidence disputing the SEC’s designation, and aren’t subject to HFCAA requirements until they have been conclusively identified, according to the SEC.

The law signed in late 2020 by then-President Donald Trump grants SEC the power to delist foreign companies from the New York Stock Exchange and Nasdaq exchange if they fail to allow U.S. watchdogs to inspect their financial audits for three straight years, beginning in 2021.

While the delisting would come after years of noncompliance with audit inspections, Baidu shares fell as much as 2.7 percent in New York on March 30. Hong Kong’s Hang Seng Tech Index, which tracks some of the biggest Chinese tech firms, lost as much as 2.3 percent the following day, Bloomberg reported.

Epoch Times Photo
People sit below a Baidu logo at the Baidu headquarters in Beijing on Dec. 17, 2014. (Greg Baker/AFP/Getty Images)

Baidu said it plans to comply with the new law.

“Baidu will continue to comply with applicable laws and regulations in both China an the United States, and strive to maintain its listing status on both Nasdaq and the HKEx,” the company said in a statement.

Like Google in the United States, Baidu is a household name in China as the most popular search engine domestically and one of the earliest tech giants to publicly trade in New York.

Chinese Vice Premier Liu He pledged official support for overseas-listed Chinese stocks on March 16, after authorities claimed last November to have been “working very hard” with Washington to prevent Chinese firms from being delisted from U.S. stock exchanges.

Beijing, however, has long barred overseas regulators from inspecting full audit reports of listed companies headquartered in mainland China and Hong Kong, citing national security and privacy.

The Public Company Accounting Oversight Board, which is tasked with oversight of major auditing firms, said it’s unable to review the audits of more than 200 Chinese companies, including Alibaba and JD.com. It also stated that China was the only jurisdiction that denied its cross-border cooperation and necessary access.

The SEC has so far flagged a total of 11 firms for noncompliance. The most recent Chinese corporation cited was Weibo, the Chinese equivalent of Twitter. The Nasdaq-listed company has 573 million monthly active users as of September 2021.

Rita Li
Rita Li is a reporter with The Epoch Times, focusing on U.S. and China-related topics. She began writing for the Chinese-language edition in 2018.