China's Baidu, Futu, IQIYI added to U.S. list facing possible delisting

Asian Tech Press (Mar. 31) -- The U.S. SEC on Wednesday added China's Baidu Inc., Futu Holdings Ltd and iQIYI Inc. to a growing list of companies facing possible delisting from American stock exchanges.

According to the U.S. Securities and Exchange Commission (SEC)'s updates under the Holding Foreign Companies Accountable Act (HFCAA), five companies on Wednesday was added to the "Provisional list of issuers" identified under the HFCAA.

It is the third batch of companies to be added to the list, including Chinese search engine giant Baidu, online broker Futu, Netflix-like video platform iQIYI, Taiwan-based fish farming company Nocera Inc. and U.S. biopharma company CASI Pharmaceuticals Inc.

According to SEC regulations, the five companies need to provide evidence to the U.S. watchdog by April 20 that they have been incorrectly identified. If they fail to do so, they will be placed on the "Conclusive list of issuers" identified under the HFCAA.

On March 8, BeiGene ltd., Yum China Holdings Inc., Zai Lab Limited, ACM Research Inc., and HUTCHMED (China) Limited were added to the list, and Weibo was added to it on March 23.

The SEC has now moved the first group of five Chinese companies from the provisional list to the conclusive list, while Weibo remains on the provisional list for now.

Futu responded Thursday that it was placed on the list because the audit report included in the company's 2021 annual report recently filed with the SEC was issued by an auditor that was not reviewed by the U.S. Public Company Accounting Oversight Board (PCAOB).

"Admission to the provisional list does not mean that the company's American Depositary Shares (ADS) will be subject to mandatory delisting in the near future," the Chinese online brokerage said.

Baidu said in a statement, "The Company has been actively seeking possible solutions and continues to ensure compliance with relevant laws and regulations in China and the United States."

"To maintain the company's listing on both the Nasdaq Stock Market and the Stock Exchange of Hong Kong, as conditions permit," the U.S.-listed tech firm added.

iQIYI also issued a statement to say, "This is a routine procedure for the U.S. regulator to enforce the previously published HFCAA and related rules. We will actively seek solutions to protect the interests of our shareholders."

As of press time, CASI Pharmaceuticals and Nocera have made no response.

The China Securities Regulatory Commission (CSRC) responded on Thursday, "For some companies listed by the SEC as being at risk of delisting, it has been learned from the U.S. SEC that this is a normal procedure for the U.S. regulator to enforce the HFCAA."

"Whether the companies included in the list are actually delisted in the next two years, ultimately depends on the progress and results of the regulatory cooperation between the U.S. and China in auditing," the Chinese regulator stressed.

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