SEC Chairman plays down any imminent agreement to avoid China delistings
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U.S. Securities and Exchange Commission Chairman Gary Gensler appeared to tone down speculation of a potential imminent deal for Chinese companies to avoid delistings in the U.S.
The SEC has threatened to delist companies that fail to allow U.S. regulators to review their company audits for three-straight years, a rule that went into effect in late 2020. The agency earlier this month named five companies from China that could be delisted for failing to abide by U.S. accounting regulations.
âThere have been thoughtful, respectful, productive conversations, but I donât know where this is going to end up,â Gensler said in a Tuesday interview with Bloomberg. âItâs up to the Chinese authorities, and it could be frankly a hard set of choices for them.â
Gensler's remarks are similar to some remarks the Public Company Accounting Oversight Board said last week, that were first reported by Bloomberg. The agency said that while it's meeting with Chinese regulators, it's not clear if Chinese authorities will agree to permit U.S inspectors to fully review audit papers of companies.
Gensler indicated to Bloomberg that only full compliance with U.S. audit inspections would suffice. 
âIf weâre in the same place two years from now,â many companies âwould be suspended,â Gensler told Bloomberg.
The PCAOB comments came after China's Vice Premier Liu He said the country would continue "to support various types of companies to list overseas," noting that it would work with U.S. regulators, including the SEC, on the matter. The comments sent shares of tech stocks such as Alibaba (BABA) skyrocketing as some investor concerns appeared to be eased on the potential delistings.
It was also reported last week that Alibaba (BABA), JD.com (JD), Baidu (BIDU) and other Chinese U.S.-listed tech firms have been told by Chinese regulators to prepare for more audit disclosures. Earlier this month, the China Securities Regulatory Commission and other agencies reached out to these companies and asked them to prepare audit documents for 2021, according to the Reuters report.