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It has been reported that the Trump administration is considering delisting Chinese companies from the U.S. stock exchange.

Trump administration officials are discussing ways to limit U.S. investors’ portfolio flows into China in a move that would have repercussions for billions of dollars in investment pegged to major indexes, according to people familiar with the internal deliberations.

Among the options the Trump administration is considering: delisting Chinese companies from U.S. stock exchanges ...

https://www.bloomberg.com/news/articles/2019-09-27/white-house-weighs-limits-on-u-s-portfolio-flows-into-china-k12ahk4g

Does the U.S. government have the power to do that? How would the government do it and how would they navigate the potential legal issues that would come with such a drastic move?

3

Of course it can. Here's one way they can do it: (claim) non-compliance with some (new) regulations.

In June, U.S. lawmakers from both parties introduced a bill to force Chinese companies listed on American stock exchanges to submit to regulatory oversight, including providing access to audits, or face delisting.

Chinese authorities have long been reluctant to let overseas regulators inspect local accounting firms - including member firms of the Big Four international accounting networks - citing national security concerns.

“Beijing should no longer be allowed to shield U.S.-listed Chinese companies from complying with American laws and regulations for financial transparency and accountability,” Republican Senator Marco Rubio said at the time.

One of the sources briefed on the matter said the idea of delisting was the latest salvo in this longstanding dispute.

“This is a very high priority for the administration. Chinese companies not complying with the PCAOB (Public Company Accounting Oversight Board) process poses risks to U.S. investors,” the source said.

This before it even gets to putting any outright/explicit sanctions on the companies involved. Which also can be done. The US government has broad power to blacklist foreign entities in all sorts of ways, from total bans on transactions like Iranian entities are facing to more limited bans that impose prior US government approval, like what Huawei is facing right now.

  • I would say demonstrated rather than claim, as the accused still has due process rights. However it would be wrong to conclude presumption of innocence extends to all regulatory matters. It does not. But still +1. – K Dog Sep 28 at 19:00
  • @KDog: I'm not totally sure, but in some regulatory matters, the companies could appeal to the courts. It would depend on the exact nature of the regulations, I suppose. See jstor.org/stable/2151663 for example. – Fizz Sep 28 at 19:05
  • Absolutely they have a right to appeal. After the ALJ rules, they still have redress in front of normal courts. There is a process. – K Dog Sep 28 at 23:41

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