Deep Background

U.S. SEC Highlights Risks of Investing in Emerging Markets


May 5, 2020
Topics: Mintz Group, News

China Times quoted a senior manager at the Mintz Group in Beijing about U.S. securities officials’ continuing guidance to investors related to Chinese companies that hide important information about themselves from investors and the public.

The daily Beijing-based newspaper reported on an April 21 statement by the U.S. Securities and Exchange Commission about enduring problems with a number of  Chinese stocks.  The SEC said that “in many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to U.S. domestic companies.”  The SEC didn’t mention any recent revelation or specific Chinese company.

The newspaper quoted Juliana Ma, a senior managing investigator and certified anti-fraud examiner at the Mintz Group, stating that the SEC’s recent criticisms echo many earlier SEC statements about Chinese companies’ lack of transparency.

“It is worth noting that this is not the first time the leadership of the U.S. Securities and Exchange Commission (SEC) has accused Chinese companies of a lack of transparency,” China Times said.  “Juliana Ma, senior managing investigator and certified anti-fraud examiner at Mintz Group, a third-party risk consulting company, told the China Times that the SEC has frequently criticized the audit quality of Chinese companies over the past ten years, saying they might cause investment risk. An SEC statement in 2018 focused on the audit risks of Chinese Internet giants Ali, Baidu and JD.com.”

The SEC’s April 21 statement pointed out that investors “should consider the potential risks” stemming from the fact that a congressionally-mandated oversight panel, the Public Company Accounting Oversight Board, is barred from access to Chinese companies’ books.