When the U.S. Senate recently passed legislation that would bar access to U.S. securities exchanges to any foreign company whose auditor is not subject to the same regulatory inspections as domestic U.S. companies, it was the culmination of a series of moves by regulators, market authorities, and legislators to try to “level the playing field” and subject the foreign companies to the same scrutiny U.S. companies and their auditors face. The recently passed Senate legislation, Senate Bill 945, known as the Holding Foreign Companies Accountable Act, was promoted by its co-sponsor, Republican Senator John Kennedy of Louisiana, as a bill that would “kick deceitful Chinese companies off U.S. exchanges.” As discussed below, in addition to the recent Senate bill, efforts by regulators and market authorities with respect to rights to inspect and supervise auditors of foreign companies with securities listed on U.S. exchanges, are continuing.
Continue Reading Senate Acts to Enforce Audit Oversight on Foreign (Especially Chinese) Companies

In the latest securities suit related to the coronavirus outbreak, a plaintiff shareholder has filed a U.S. securities class action lawsuit against a Chinese real estate firm whose American Depositary Shares (ADSs) are listed on the NYSE, based on allegations that the company’s January 2020 IPO offering documents failed to disclose the impact of the outbreak on the company’s residential real estate operations in China. This latest filing is the first coronavirus-related securities lawsuit in the U.S. against a non-U.S. company. A copy of the plaintiff’s April 24, 2020 complaint can be found here.
Continue Reading U.S.-Listed Chinese Real Estate Firm Hit with Coronavirus-Related Securities Suit

For some time now, some observers had been predicting that we would be seeing a bunch of data breach-related securities class action lawsuits, but the predicted wave never seemed to materialize. However, with a recent uptick in these kinds of cases, that could be changing. On October 8, 2018, in the latest of these kinds of lawsuits to be filed, a plaintiff shareholder filed a securities class action lawsuit against China-based Huazhu Group. As discussed below, there are a number of interesting features of this latest data breach-related securities suit.
Continue Reading Chinese Hotel Company Hit With Data Breach-Related Securities Suit

It is axiomatic in the current global economy that every business needs to have a China strategy. Most business enterprises are drawn to the world’s most populous country and second-largest economy. But while China represents an attractive business marketplace, it can also in many respects be a perilous place to try to do business, particularly from a regulatory and compliance standpoint. While most businesses may recognize these challenges, many may struggle to try and address the concerns. A new book entitled “Governance, Risk and Compliance Management in China” (here), which I review below, may provide substantial help to companies trying to address compliance concerns arising from doing business in China. Of particular interest to this blog’s readers, the book includes an interesting chapter on D&O insurance issues in China.  
Continue Reading Book Review: Governance and Risk Management in China

As I noted in a post last week discussing the derivative lawsuit and settlement involving 21st Century Fox, allegations of failure to prevent alleged misconduct within company operations or at company facilities can translate into potential liability exposure for the company and its senior management. Another example of this phenomenon has emerged. In the weeks just after RYB Education completed its late September 2017 IPO, news reports began circulating of alleged child abuse at company preschool education facilities in China. Now a shareholder has filed a securities class action lawsuit in the U.S. against the company and certain of its executives. As discussed below, this new lawsuit represents the latest example of several different securities class action lawsuit filing trends.
Continue Reading Chinese Preschools’ Child Abuse Reports Lead to U.S. Securities Suit Against Recent IPO Company

cflagLong-time readers of this blog will recall that in 2011, there was a rash of U.S. securities class action lawsuits filed against U.S.-listed Chinese companies. Many of these companies had obtained their U.S.-listings by way of a reverse merger with a U.S.-listed public shell. The 39 securities suits filed in 2011 against U.S.-listed Chinese companies represented 18% of all securities class action lawsuits filed in the U.S. that year. While the number of lawsuit filed against Chinese reverse-merger companies has abated since the peak in 2011, U.S. securities lawsuits continue to be filed against Chinese companies at a significant rate.
Continue Reading Uptick in Securities Suits Against U.S.-Listed Chinese Companies

chinaFor a brief period in the 2010-2012 time frame, U.S. securities lawsuits filings against U.S.-listed Chinese companies surged as investors filed a wave of lawsuits against Chinese companies that obtained U.S.-listings by way of a merging with a publicly traded shell. The Chinese reverse merger lawsuit filing wave eventually subsided – yet filings against U.S.-listed