Republicans urge Gensler to investigate Chinese companies

Senate Republicans are calling on SEC Chair Gary Gensler to investigate Chinese companies that list shares on U.S. stock exchanges after American investors suffered from a surprise crackdown on the firms by government officials in China.

Seven GOP lawmakers led by Sen. Dan Sullivan of Alaska are also pressing Gensler to scrutinize underwriters involved in the Chinese companies' U.S. initial public offerings and index providers that include the companies in their products. The senators urging the SEC to act include Sens. John Kennedy (R-La.), Tom Cotton (R-Ark.), Kevin Cramer (R-N.D.), Bill Hagerty (R-Tenn.), Marsha Blackburn (R-Tenn.) and Rick Scott (R-Fla.).

The senators in a letter to Gensler sent Thursday cited the recent stock price plunge of Beijing-based ride-hailing company Didi Global shortly after its IPO on the New York Stock Exchange. Didi shares took a nosedive earlier this month when regulators in China cut off downloads of its app, citing national cybersecurity risks.

The lawmakers said Didi executives downplayed the risks of Chinese regulation before going public and that the episode "highlights the troubling trend of Chinese companies taking advantage of our capital markets while ignoring the transparency that is required under U.S. law to access U.S. markets."

"The SEC should launch investigations into Chinese companies, like Didi, and their underwriters to combat potential fraud and reporting oversights," they said.

The Republicans also pressed Gensler to pursue "expeditious implementation and enforcement" of a bill enacted in December and sponsored by Kennedy that would kick China-based companies off U.S. stock exchanges if they refuse to allow federal regulators to review their books.

In June, the Senate passed a follow-up bill that would accelerate the timeline for companies in China to be booted from exchanges under the new law.

The SEC did not respond to a request for comment.