Hagerty, Rubio, Rick Scott Introduce Legislation Mandating Chinese Financial Firms Use Auditors Without Communist Ties

December 14, 2023

Rep. Elise Stefanik is leading the effort in the U.S. House of Representatives

WASHINGTON—United States Senators Bill Hagerty (R-TN), Marco Rubio (R-FL), and Rick Scott (R-FL) yesterday introduced the Trusted Foreign Auditing Act, legislation to protect U.S investors and capital by requiring Chinese companies to use independent auditors not controlled by the Communist Party. Representative Elise Stefanik (R-NY-21) has introduced companion legislation in the U.S. House of Representatives.

For years, companies based in the People’s Republic of China (PRC) that are listed on U.S. stock exchanges have failed to comply with U.S. securities law. In response, Congress passed the Holding Foreign Companies Accountable Act, which requires China-based companies to make their audits available to U.S. inspectors or else be de-listed from U.S. stock exchanges.

In the years since, Chinese firms have used dishonest auditors with ties to the Chinese Communist Party in an attempt to sidestep the law. The Public Company Accounting Oversight Board (PCAOB) found these auditors were not meeting American auditing standards. 

“For too long, Chinese companies have been allowed to access our capital markets without complying with our nation’s auditing requirements,” said Senator Hagerty. “I’m pleased to join Senator Rubio on this legislation that will force transparency from these companies.”

“We have allowed Chinese companies to become a black hole, swallowing hundreds of millions of investor dollars with little to no transparency about their operations,” said Senator Rubio. “No more. This legislation will shed much-needed light on an economy that threatens both our prosperity and our security. If these Chinese companies are unwilling to comply with our laws, they will be kicked off our exchanges.”

“Companies controlled by the CCP operate in complete secrecy with no transparency into their books or business dealings,” said Senator Scott. “The Trusted Foreign Auditing Act is a good step in the right direction to ensure that when Americans invest their dollars on domestic financial exchanges, there will be accurate information regarding their investments. I am proud to stand with my colleagues to introduce this important legislation that will force accountability and protect American investors.”

“I am proud to join Senator Rubio in introducing the Trusted Foreign Auditing Act to help protect U.S. investors, businesses, and interests from Communist China’s hostile behaviors,” said Representative Stefanik. “This bill will require all companies that are listed on the U.S. stock exchange to retain independent auditors to ensure they are fully compliant with U.S. law. We cannot allow Communist China to completely disregard the rules required to access American capital. This legislation will put guardrails in place to protect American investors and hold Chinese companies accountable.”

Full text of the legislation can be found here.