The Securities and Exchange Commission is poised to revise its treatment of foreign private issuers.
While recognizing that they do not want to deter foreign issuers from US markets, there seems to be an agreement that the playing field needs to be leveled, as disparities exist between domestic and foreign issuers regarding compliance and disclosure.
Commissioner Mark Uyeda added his voice to the announced consultation on a change in rules stating “any regulatory answer to the questions in today’s concept release should be based on ensuring that the SEC’s treatment of foreign issuers reflects today’s global capital markets and does not place U.S. companies at a competitive disadvantage or deprive U.S. investors from receiving appropriate disclosure. Informational asymmetries can increase investment risks and raise the cost of capital to compensate for such risk.”
All current Commissioners have expressed their interest in supporting some type of private issuer reform.
A key aspect of the concept release is that, around twenty years ago, Canada was the primary jurisdiction using the pathway, and today, it is China routed through the Caymans.
China currently poses the most significant risk to the US in decades, both economically and militarily. President Xi Jinping has declared his intent to take over Taiwan by force if necessary. Xi is also closely aligned with Russia, Iran, and North Korea – top Western adversaries. If Taiwan were attacked, it could significantly impact the US economy while destabilizing the entire Asia-Pacific region. While the Commissioners have not mentioned this fact, the concept release may be viewed as part of a broader policy of the Trump administration.