Weibo faces US stock exchange delisting

China's Twitter analog is latest in SEC crosshairs over audits


Weibo, the Chinese equivalent to Twitter, has been added to an SEC roll of companies that may be delisted due to inaccessible audits. Surprisingly, China seems to be taking DC's side.

The microblogging platform is the sixth company to be added to a US Securities and Exchange Commission (SEC) roster of companies facing being booted off the stock exchange, with five of these based in China.

The Weibo Corporation – whose stock trades on the NASDAQ – joins cancer treatment biotech company BeiGene, Chinese KFC brand owner Yum China Holdings, biopharma firm Zai Lab, and pharmaceutical company HUTCHMED. US-based wet processing semiconductor firm ACM Research, which has research facilities in China, is also included in the list.

The list is made up of companies that fall foul of the 2020 Holding Foreign Companies Accountable Act (IFCAA), which affects organizations with offices in foreign jurisdictions that retain an accounting firm to issue audits.

The Public Company Accounting Oversight Board, which is responsible for reviewing said audits, can refer an organization for inclusion on the list when "it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction."

Companies aren't automatically delisted, and are given 15 business days to supply evidence that they shouldn't be. Of the six groups on the list, five have until March 29 to submit their evidence. Weibo was added more recently and has until April 13.

Beijing isn't angry

While it would seem that the US's latest move would inflame tensions, that may not be the case.

On the same day that Weibo was added to the SEC list, Chinese regulators summoned some of the country's largest tech companies, Weibo included, and told them to begin following requests from US regulators.

Per Reuters, the move follows reported government proposals to begin allowing US auditors to inspect papers from firms that don't gather sensitive information, likely to prevent their companies from losing access to US stock exchanges.

The US and China have been in an on-again-off-again audit fight for years because US companies want to audit Chinese-based ones that do business in the States, and China won't allow that due to national security concerns.

Regulatory crackdowns by the US on Chinese companies have cost those organizations hundreds of billions of dollars in lost valuation. ®


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