Wall St Watchdog to Consider Rules on US-Traded Foreign Firms

The U.S. Securities and Exchange Commission on Wednesday is due to take the first steps toward producing new rules on which foreign firms qualify for less stringent investor disclosure requirements, according to a public notice.

The public meeting, set for 1 p.m. in Washington, comes a year after a Republican Commissioner Mark Uyeda called for a public comment process on changing the definition of publicly traded foreign firms. He singled out Chinese companies as enjoying easier reporting requirements even when they are solely traded on U.S. stock markets.

The commission is due to consider whether to issue a call for public comment on possible new rules, the substance of which the SEC has not yet made public.

Spokespeople for the agency and for Uyeda declined to comment. In an address at Harvard last year, Uyeda said companies primarily owned and administered abroad qualified as "foreign private issuers" — meaning they were only required to file annual reports and occasional market updates, even if they were solely traded on a U.S. stock exchange.

A 2024 congressional study indicated nearly 90% of the 265 Chinese firms publicly traded in the U.S. were not listed on stock exchanges elsewhere, according to Uyeda.

On the other hand, U.S. firms trading on the same stock exchanges fall under the full scope of American securities laws, including quarterly financial reporting, proxy solicitation rules and prompt disclosure of "material events" such as mergers and the departures of board members, he said at the time.

"This issue deserves attention, and the SEC should consider evaluating whether foreign private issuers should be limited to companies whose securities are also listed on a foreign stock exchange," Uyeda said.