After the Chinese coffee company Lucking Coffee collapsed under an investigation by federal regulators due to a fraudulent transaction scandal, it managed to bring to the attention of the Donald Trump government a stock exchange deal between the Chinese Communist Party (CCP) and the United States signed in the Obama-Biden era.
The Chinese coffee company, which was founded in 2017 with an eye to outperforming Starbucks, has been embroiled in a scandal in recent months after an investigation revealed that much of its 2019 sales had been manufactured, reported Reuters, causing its shares to fall by up to 82 percent in U.S. trading.
At the end of February this year, the company that ended up firing its chief executive officer and chief operating officer and referred to the accusations against them as “misleading and false,” according to the BBC.
By 2013, Chinese companies were allowed to participate in the U.S. stock and bond market, despite express regulations in the Sarbanes-Oxley Act on risk disclosure to which U.S. companies were subject, which have not been the same for Chinese companies.
Chinese operations in the U.S. financial market were strengthened after several meetings were held with then-Vice President Joe Biden, which finally led to an agreement endorsed by the PCAOB (Public Company Accounting Oversight Board).
However, seven years after the agreement was signed, the PCAOB and its parent the Securities and Exchange Commission have allowed the agreement to continue despite warnings from the very commission that the CCP has been failing to comply with the Memorandum of Understanding (MOU), leaving potentially risky investments of up to $1.9 trillion to global investors.
In a recent statement, the PCAOB reported: “Unfortunately, since signing the MOU in 2013, Chinese cooperation has not been sufficient for the PCAOB to obtain timely access to relevant documents and testimony necessary to carry out our mission consistent with the core principles identified above, nor have consultations undertaken through the MOU resulted in improvements.
Several conservative and liberal activists with expertise in national security sent a letter to President Donald Trump, noting his concerns about the inflated valuation of Chinese entities, influenced by the CCP, on the stock market.
“It is unconscionable that Chinese entities that have already raised over a trillion dollars from U.S. investors have their securities (stocks, bonds, etc.) registered with the Securities and Exchange Commission, but have been given a ‘pass’ from compliance with the statutes, regulations, and accounting standards required of SEC-registered American corporations,” the letter said.
The complaint brought to the president’s attention will be addressed as he ordered the Federal Retirement Savings Investment Board, which oversees the Federal and Military Retirement Funds Savings Plan, to halt CCP’s investments through the implementation of a global index.
As Just the News reported, the decision to allow millions of retirement dollars to be invested in Chinese companies, with CCP connections, including military contractors and human rights abusers, was made in 2017 by Obama appointees.
President Trump argued that economic security and national security go hand in hand when it comes to the CCP, while advocates of a second intervention along with the PCAOB believe that such an argument also applies to U.S. capital markets.
As for the CCP’s noncompliance with the MOU, President Trump told Fox Business News host Maria Bartiromo that the White House was reviewing the matter.
“What happens is, so we say, ‘You’re going to do this and you’re going to follow the rules of the New York Stock Exchange or Nasdaq.’ And what are they going to do? They say, ‘OK, we’ll move to London or we’ll move to Hong Kong,'” Trump said, referring to an issue that has been addressed and is well known to regulators but to which nothing has been done.