[Congressional Record Volume 166, Number 203 (Wednesday, December 2, 2020)]
[House]
[Pages H6031-H6035]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HOLDING FOREIGN COMPANIES ACCOUNTABLE ACT

  Mr. CLAY. Mr. Speaker, I move to suspend the rules and pass the bill 
(S. 945) to amend the Sarbanes-Oxley Act of 2002 to require certain 
issuers to disclose to the Securities and Exchange Commission 
information regarding foreign jurisdictions that prevent the Public 
Company Accounting Oversight Board from performing inspections under 
that Act, and for other purposes, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                 S. 945

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Holding Foreign Companies 
     Accountable Act''.

     SEC. 2. DISCLOSURE REQUIREMENT.

       Section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7214) is amended by adding at the end the following:
       ``(i) Disclosure Regarding Foreign Jurisdictions That 
     Prevent Inspections.--
       ``(1) Definitions.--In this subsection--
       ``(A) the term `covered issuer' means an issuer that is 
     required to file reports under section 13 or 15(d) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); and
       ``(B) the term `non-inspection year' means, with respect to 
     a covered issuer, a year--
       ``(i) during which the Commission identifies the covered 
     issuer under paragraph (2)(A) with respect to every report 
     described in subparagraph (A) filed by the covered issuer 
     during that year; and
       ``(ii) that begins after the date of enactment of this 
     subsection.
       ``(2) Disclosure to commission.--The Commission shall--
       ``(A) identify each covered issuer that, with respect to 
     the preparation of the audit report on the financial 
     statement of the covered issuer that is included in a report 
     described in paragraph (1)(A) filed by the covered issuer, 
     retains a registered public accounting firm that has a branch 
     or office that--
       ``(i) is located in a foreign jurisdiction; and
       ``(ii) the Board is unable to inspect or investigate 
     completely because of a position taken by an authority in the 
     foreign jurisdiction described in clause (i), as determined 
     by the Board; and
       ``(B) require each covered issuer identified under 
     subparagraph (A) to, in accordance with the rules issued by 
     the Commission under paragraph (4), submit to the Commission 
     documentation that establishes that the covered issuer is not 
     owned or controlled by a governmental entity in the foreign 
     jurisdiction described in subparagraph (A)(i).
       ``(3) Trading prohibition after 3 years of non-
     inspections.--
       ``(A) In general.--If the Commission determines that a 
     covered issuer has 3 consecutive non-inspection years, the 
     Commission shall prohibit the securities of the covered 
     issuer from being traded--
       ``(i) on a national securities exchange; or
       ``(ii) through any other method that is within the 
     jurisdiction of the Commission to regulate, including through 
     the method of trading that is commonly referred to as the 
     `over-the-counter' trading of securities.
       ``(B) Removal of initial prohibition.--If, after the 
     Commission imposes a prohibition on a covered issuer under 
     subparagraph (A), the covered issuer certifies to the 
     Commission that the covered issuer has retained a registered 
     public accounting firm that the Board has inspected under 
     this section to the satisfaction of the Commission, the 
     Commission shall end that prohibition.
       ``(C) Recurrence of non-inspection years.--If, after the 
     Commission ends a prohibition under subparagraph (B) or (D) 
     with respect to a covered issuer, the Commission determines 
     that the covered issuer has a non-inspection year, the 
     Commission shall prohibit the securities of the covered 
     issuer from being traded--
       ``(i) on a national securities exchange; or
       ``(ii) through any other method that is within the 
     jurisdiction of the Commission to

[[Page H6032]]

     regulate, including through the method of trading that is 
     commonly referred to as the `over-the-counter' trading of 
     securities.
       ``(D) Removal of subsequent prohibition.--If, after the end 
     of the 5-year period beginning on the date on which the 
     Commission imposes a prohibition on a covered issuer under 
     subparagraph (C), the covered issuer certifies to the 
     Commission that the covered issuer will retain a registered 
     public accounting firm that the Board is able to inspect 
     under this section, the Commission shall end that 
     prohibition.
       ``(4) Rules.--Not later than 90 days after the date of 
     enactment of this subsection, the Commission shall issue 
     rules that establish the manner and form in which a covered 
     issuer shall make a submission required under paragraph 
     (2)(B).''.

     SEC. 3. ADDITIONAL DISCLOSURE.

       (a) Definitions.--In this section--
       (1) the term ``audit report'' has the meaning given the 
     term in section 2(a) of the Sarbanes-Oxley Act of 2002 (15 
     U.S.C. 7201(a));
       (2) the term ``Commission'' means the Securities and 
     Exchange Commission;
       (3) the term ``covered form''--
       (A) means--
       (i) the form described in section 249.310 of title 17, Code 
     of Federal Regulations, or any successor regulation; and
       (ii) the form described in section 249.220f of title 17, 
     Code of Federal Regulations, or any successor regulation; and
       (B) includes a form that--
       (i) is the equivalent of, or substantially similar to, the 
     form described in clause (i) or (ii) of subparagraph (A); and
       (ii) a foreign issuer files with the Commission under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or 
     rules issued under that Act;
       (4) the terms ``covered issuer'' and ``non-inspection 
     year'' have the meanings given the terms in subsection (i)(1) 
     of section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7214), as added by section 2 of this Act; and
       (5) the term ``foreign issuer'' has the meaning given the 
     term in section 240.3b-4 of title 17, Code of Federal 
     Regulations, or any successor regulation.
       (b) Requirement.--Each covered issuer that is a foreign 
     issuer and for which, during a non-inspection year with 
     respect to the covered issuer, a registered public accounting 
     firm described in subsection (i)(2)(A) of section 104 of the 
     Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214), as added by 
     section 2 of this Act, has prepared an audit report shall 
     disclose in each covered form filed by that issuer that 
     covers such a non-inspection year--
       (1) that, during the period covered by the covered form, 
     such a registered public accounting firm has prepared an 
     audit report for the issuer;
       (2) the percentage of the shares of the issuer owned by 
     governmental entities in the foreign jurisdiction in which 
     the issuer is incorporated or otherwise organized;
       (3) whether governmental entities in the applicable foreign 
     jurisdiction with respect to that registered public 
     accounting firm have a controlling financial interest with 
     respect to the issuer;
       (4) the name of each official of the Chinese Communist 
     Party who is a member of the board of directors of--
       (A) the issuer; or
       (B) the operating entity with respect to the issuer; and
       (5) whether the articles of incorporation of the issuer (or 
     equivalent organizing document) contains any charter of the 
     Chinese Communist Party, including the text of any such 
     charter.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Clay) and the gentleman from Ohio (Mr. Gonzalez) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Missouri.


                             General Leave

  Mr. CLAY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. CLAY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of S. 945, the Holding Foreign 
Companies Accountable Act, which would suspend the trading of 
securities of foreign issuers that retain accounting firms not subject 
to audit by the Public Company Accounting Oversight Board after 3 years 
of noncompliance, as well as require the issuer to disclose whether it 
is owned or controlled by a foreign government.
  I would like to thank Senator Kennedy and Representative Sherman, who 
cosponsored the House version of S. 945, for working on this incredibly 
important and long-overdue piece of legislation.
  The Enron and WorldCom financial reporting scandals wiped out 
billions of dollars from retirement accounts, eliminated tens of 
thousands of jobs, and defrauded investors hundreds of billions of 
dollars. To ensure U.S. investors, workers, retirees, and capital 
markets were never again exposed to this type of egregious fraud, 
Congress established the PCAOB through the Sarbanes-Oxley Act to 
protect investors by overseeing the audits of public companies and 
ensuring the preparation of informative, accurate, and independent 
corporate disclosures and audit reports by inspection.
  As former PCAOB board member Steven Harris noted: ``The PCAOB was 
established because the accounting profession's framework of self-
regulation had failed,'' and the creation of an independent auditor to 
inspect and verify corporate disclosures and audit work was necessary.
  However, citing various foreign secrecy, privacy, and national 
security laws, many foreign issuers who enjoy the full benefits and 
privileges of trading on U.S. exchanges and access to U.S. public 
markets have openly flouted U.S. investor protections and prohibited 
the PCAOB from inspecting their corporate disclosures as well as the 
auditor's work.
  According to a June 2020 PCAOB report, China alone had 202 public 
companies listed on U.S. exchanges representing $1.8 trillion in market 
capitalization that the PCAOB has been unable to fully and adequately 
inspect.
  Make no mistake, the ability of foreign issuers to circumvent PCAOB 
inspection affirmatively allows foreign companies to exploit U.S. 
workers and retirees and comes at the direct expense of U.S. investors 
and the integrity of U.S. markets. To continue with business as usual 
reverts us back to the Enron and WorldCom status quo.
  By suspending the trading of securities issued by foreign issuers who 
are not fully compliant with PCAOB audit inspections for 3 years, the 
Holding Foreign Companies Accountable Act will hold noncompliant 
foreign issuers accountable and help safeguard U.S. investors and the 
integrity of our markets.
  We can no longer allow foreign issuers to exploit our system. I call 
on my colleagues on both sides of the aisle to stand with me in 
protecting American workers, retirees, and investors by supporting the 
bipartisan Holding Foreign Companies Accountable Act.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1630

  Mr. GONZALEZ of Ohio. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the bill before us today relates to an issue that the 
President's Working Group on Financial Markets and the Securities and 
Exchange Commission are diligently working to address: the Public 
Company Accounting Oversight Board's inability to inspect the audit 
work and practices of PCAOB-registered auditing firms in China.
  The mission of the PCAOB is to oversee the audits of public companies 
and provide the public with informative, accurate, and independent 
audit reports. The Sarbanes-Oxley Act and the PCAOB's rules impose 
requirements on firms that perform audit work for public companies, 
which include providing complete and timely access for PCAOB 
inspections.
  Conducting inspections in the United States is simple; however, 
conducting them internationally requires agreements with foreign 
regulators and firms.
  Over the years, the PCAOB has worked closely with their foreign 
counterparts on specific requirements for nearly all jurisdictions that 
have U.S.-listed public companies. This collaboration allows for joint 
inspections and enforcement matters. However, there are a few countries 
for which no such agreements exist. The outstanding jurisdictions 
include Belgium, France, Hong Kong, and China.
  The Board is currently working on agreements that would lead to 
cooperation in Belgium and France and expects to have a final 
cooperative agreement to facilitate access in the near future.
  China, on the other hand, has skirted these requirements. They have 
done so without showing any interest in allowing for such cooperation. 
As a result, the PCAOB cannot inspect the audit work and practices of 
firms in China and Hong Kong to the extent their clients have 
operations in mainland

[[Page H6033]]

China. The Chinese Government has exacerbated the situation by 
prohibiting audit firms from providing this information without the 
consent of Chinese financial regulators.
  Mr. Speaker, this bill before us today prohibits the securities of a 
public company from being traded on a national securities exchange if 
the issuer has had 3 consecutive ``non-inspection years,'' that is, 
years that the PCAOB is unable to inspect a public company's auditors.
  During these non-inspection years, each company would be required to 
disclose the percentage of the shares owned by governmental entities, 
the governmental entities that have a controlling financial interest, 
and if any official of the Chinese Communist Party is a member of the 
company's board as well as any ownership by the CCP.
  As the title of this legislation suggests, the Holding Foreign 
Companies Accountable Act is designed to prevent companies based in 
China and certain other jurisdictions from taking advantage of our deep 
and liquid capital markets while avoiding the scrutiny that comes with 
inspection of their financial statement audits.
  This situation is unfair and dangerous for investors. For that 
reason, the act should be read to apply to companies where the auditor 
that signs the audit report is located in a jurisdiction that does not 
permit PCAOB inspection access.
  Mr. Speaker, nearly 6 months ago, the President released the 
Memorandum on Protecting United States Investors from Significant Risks 
from Chinese Companies. The memo directed the President's Working Group 
on Financial Markets to provide recommendations to address the issues 
with China. Three months ago, the President's Working Group released 
that report.
  The report comprehensively details a number of recommendations to 
level the playing field for all companies listed on our exchanges and 
improve disclosure on the risks of investing in emerging markets. The 
implementation of these recommendations would effectuate the intent of 
Senator Kennedy's legislation.
  Moreover, immediately following the release of the report, SEC 
Chairman Clayton directed staff to prepare proposals to address these 
recommendations in a comprehensive and transparent manner through the 
rulemaking process.
  Mr. Speaker, I applaud Senator Kennedy and his staff for their 
efforts and the President's Working Group on Financial Markets, as well 
as the PCAOB for their diligence.
  I also thank House Minority Leader McCarthy and House Committee on 
Foreign Affairs Ranking Member McCaul for their leadership on the China 
Task Force. Republicans have and will continue to fight against 
communism and the global threat the Chinese Government poses.
  Mr. Speaker, finally, I thank Mr. Sherman for working with me to have 
similar legislation included in the House NDAA and his work in bringing 
this legislation to the floor today.
  Again, I thank the gentleman from Louisiana, Senator Kennedy, for all 
his work in standing up to China, and I reserve the balance of my time.
  Mr. CLAY. Mr. Speaker, it gives me great pleasure to yield such time 
as he may consume to the gentleman from California (Mr. Sherman), my 
20-year friend and colleague.
  Mr. SHERMAN. Mr. Speaker, I thank the gentleman for yielding. I will 
speak longer than I usually do on these bills because I both want to 
persuade people to support the bill and also provide important 
information to the entire House that will be part of the legislative 
history of this bill and is designed to guide the SEC in issuing 
appropriate regulations.
  Mr. Speaker, I rise in strong support of S. 945, the Holding Foreign 
Companies Accountable Act. I thank Chairwoman Waters and her staff for 
working with my office, and all the members who have been involved in 
this bill and making this issue a priority.
  Mr. Speaker, I believe this will be perhaps the most significant 
piece of investor protection legislation that the Congress adopts this 
Congress because it applies to some 224 publicly traded companies and 
assures investors of the financial statement integrity that they expect 
from all companies that are traded in the United States.
  Mr. Speaker, let's go back in history a bit. For well over a century, 
investors in corporations have insisted that the financial statements 
they get are audited by an independent auditor. But at the beginning of 
this century, we learned that that was not enough. We saw Enron and 
WorldCom. We passed the Sarbanes-Oxley bill, and created the PCAOB so 
that we have a system where not only are the companies' financial 
statements audited, but the audit is subject to being audited by a 
governmental entity. That is essential in this century to have 
investors adequately protected. So when we are dealing with 224 public 
companies with $1.8 trillion in capitalization, we need that level of 
protection.
  Mr. Speaker, I thank my colleague from Ohio (Congressman Gonzalez) 
for joining me in leading on this issue in the House. I thank my good 
friend and cochair of the bicameral, bipartisan CPA Caucus, Mike 
Conaway, who has been working on these issues for many years. And I 
thank Senators Kennedy and Van Hollen for their leadership in advancing 
this bill.
  Mr. Speaker, currently the PCAOB, the Public Company Accounting 
Oversight Board, is unable to inspect the audit work and practices of 
certain audit firms in a handful of jurisdictions. Today, that includes 
Belgium and France to some degree, but, primarily, the issue is China. 
In most cases, audit firms in those jurisdictions cite local laws 
related to data protection or national security as a reason for being 
unable to provide the PCAOB with the information they need.
  Accordingly, as I mentioned before, the PCAOB has noted that the 
auditor for some 224 U.S.-listed companies with a combined total 
capitalization of $1.8 trillion is not subject to the enhanced 
oversight that this Congress has insisted upon since 2002.
  Since it was created, the PCAOB has established a formal cooperative 
relationship with foreign audit regulators that have allowed it to 
conduct inspections of firms in more than 59 U.S. jurisdictions. 
However, the PCAOB and the Securities Exchange Commission have tried to 
engage with Chinese regulators for over a decade in an effort to reach 
a similar cooperative agreement and are still not able to conduct 
inspections with regard to China or Hong Kong.
  Mr. Speaker, our legislation will bring an end to this sort of risk 
for investors in U.S. markets by requiring the SEC to stop trading in a 
company's stocks if the PCAOB is unable to inspect the audit report and 
the audit work papers for a period of 3 years.
  Mr. Speaker, this is an investor protection bill. I am chair of the 
Investor Protection and Capital Markets Subcommittee. This bill is not 
anti-China, and it is not designed to prohibit the trading of Chinese 
companies. Rather, it provides a 3-year window, during which we expect 
China will enter into a reasonable agreement with the SEC and the PCAOB 
so that we have the additional level of protection for investors that 
we expect and have demanded since we passed the Sarbanes-Oxley bill in 
2002.
  Mr. Speaker, I am pleased to say that the House has already passed 
this legislation in similar--and actually, superior--form as an 
amendment to the 2001 NDAA, National Defense Authorization Act. It is 
the intention of the authors of this Senate bill to achieve exactly 
what that language--approved by the House earlier this year--sets 
forward. And that amendment to the NDAA is part of the legislative 
history of this bill and our consideration of it today.
  Mr. Speaker, in order to guide the interpretation of this bill, 
Senator Kennedy and I have a statement, and I include in the Record 
that statement.

                                              United States Senate
     Statement: S. 945--Holding Foreign Companies Accountable Act. 
         Considered on Friday, December 2, 2020
       Madam Speaker, I write to submit a statement for the record 
     to address S. 945, the Holding Foreign Companies Accountable 
     Act.
       It is the intent of this legislation to provide the 
     Securities and Exchange Commission with the discretion 
     necessary to determine how much of a company's total audit 
     must be performed by a firm beyond the reach of PCAOB 
     inspections before trading in the company's securities is 
     prohibited by the Commission. Consistent with our work with 
     the Securities and Exchange Commission on this legislation, 
     it is our expectation that the Commission will not prohibit 
     trading in

[[Page H6034]]

     the securities of companies under this act, as long as not 
     more than one third of a company's total audit is performed 
     by a firm beyond the reach of PCAOB inspections. This 
     legislation provides the Commission with the authority to 
     determine how an audit would be measured, whether that be 
     total revenue, assets, or another metric.
       Furthermore, the scope of this legislation is not intended 
     to be limited to public companies which rely on foreign audit 
     firms that have some form of ownership relationship with a 
     PCAOB-registered public accounting firm. Specifically, it is 
     intended to also encompass public companies which rely on 
     foreign audit firms that are affiliated with or maintain some 
     form of affiliation agreement with a PCAOB-registered public 
     accounting firm.
                                                     John Kennedy,
                                                     U.S. Senator.
  Mr. SHERMAN. Mr. Speaker, I will read it so that it is before the 
entire House.
  ``It is the intent of this legislation to provide the Securities and 
Exchange Commission with the discretion necessary to determine how much 
of a company's total audit must be performed by a firm beyond the reach 
of PCAOB inspections before trading in the company's securities is 
prohibited by the Commission. Consistent with our work with the 
Securities and Exchange Commission on this legislation, it is our 
expectation that the Commission will not prohibit trading in the 
securities of companies under this act, as long as not more than one-
third of a company's total audit is performed by a firm beyond the 
reach of the PCAOB inspections. This legislation provides the 
Commission with the authority to determine how an audit would be 
measured, whether that be total revenue, assets, or another metric.
  ``Furthermore, the scope of this legislation is not intended to be 
limited to public companies which rely on foreign audit firms that have 
some form of ownership relationship with a PCAOB-registered public 
accounting firm. Specifically, it is intended to also encompass public 
companies which rely on foreign audit firms that are affiliated with or 
maintain some form of affiliation agreement with a PCAOB-registered 
public accounting firm.''
  Mr. Speaker, one particular comment to draw your attention to is that 
it is not the intention of this bill to cover firms that have some 
small part of their audit being done in China, perhaps one subsidiary 
in China, but is rather designed to apply when a third or more of the 
audit is not subject to PCAOB inspection. And how you define one-third 
of the audit, whether that is the audit of one-third of the revenues or 
one-third of the assets, or some other metric, is left to the SEC.
  As House sponsor of this legislation, I have cosigned the statement I 
have just read, prepared by Senator Kennedy, but would have the 
following additional remarks:
  I will take this opportunity to make clear, it is not the intention 
of this legislation that every public company, which is a client of an 
audit firm with a branch, office, or affiliate in a jurisdiction beyond 
the reach of the PCAOB inspections, be subject to a trading 
prohibition.
  Instead, the trading prohibitions required under this bill are 
intended to be applied when a significant portion of the audit is 
prepared by an audit firm or the branch, or office, or affiliate of an 
audit firm which the PCAOB is unable to inspect, and the SEC has the 
authority to interpret this provision.
  As chair of the Investor Protection and Capital Markets Subcommittee, 
I appreciate how critical it is for investors on U.S. stock exchanges 
to have the additional protection that the financial statements have 
not just been audited, but that that audit is subject to review by the 
PCAOB.
  Mr. Speaker, I appreciate my colleagues for their support of this 
legislation, and look forward to its passage here today.
  Mr. Speaker, I thank the gentleman for yielding me enough time to 
both describe the major parts of the legislation and also make it clear 
to the regulators what expectations the House and Senate have for the 
regulations that they will issue.
  Mr. GONZALEZ of Ohio. Mr. Speaker, may I inquire how much time each 
side has remaining.
  The SPEAKER pro tempore. The gentlemen from Ohio has 16 minutes 
remaining. The gentleman from Missouri has 6\1/2\ remaining.
  Mr. GONZALEZ of Ohio. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I simply urge my colleagues to support S. 945.
  Again, I thank everyone for making this legislation possible. I thank 
Mr. Sherman for his comments and his work and partnership on this 
important issue.
  I yield back the balance of my time.
  Mr. CLAY. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, let me first thank my friend from Maryland, Senator 
Chris Van Hollen, for his cosponsorship of this legislation.
  The Holding Foreign Companies Accountable Act would require the SEC 
to suspend the trading of securities at issue by foreign issuers who 
are not fully compliant with PCAOB audit inspection for 3 years, 
commencing upon the enactment of this bill, as well as require foreign 
issuers to disclose whether they are owned or controlled by a foreign 
government.
  For too long, foreign issuers have circumvented important investor 
protections crafted by Congress to protect U.S. investors, retirees, 
workers, and U.S. capital markets. This commonsense bill does nothing 
more than ensure a level playing field by requiring foreign issuers to 
play by the same rules as everyone else.
  Additionally, with passage of this bill, investors and markets can be 
assured that the legally required disclosures they are receiving 
pursuant to U.S. law from the company they are investing in have been 
thoroughly vetted by an independent entity whose mission is to protect 
investors and safeguard market integrity.
  Maintaining the status quo would allow foreign issuers to continue to 
exploit U.S. retirees, workers, and investors, all while allowing them 
continued access to the greatest, most dynamic capital market system in 
the world.
  I call on all my colleagues on both sides of the aisle to join me in 
supporting the bipartisan Holding Foreign Companies Accountable Act.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BARR. Mr. Speaker, I rise in strong support of S. 945. The United 
States has the most robust and advanced capital markets in the world. 
They provide access to capital for some of the most innovative 
businesses, and create an avenue for investors of all levels to save 
for retirement and plan for their futures.
  It follows that companies from around the globe flock to the U.S. 
capital markets to fund their businesses; and the U.S. is happy to be 
the destination for these firms. However, to play in our markets, 
companies need to play by our rules; and Chinese firms listed on 
American exchanges are the worst and most frequent offenders. Gone are 
the days when we can sit idly by and let Chinese firms, many with 
strong ties to the Chinese Communist Party, participate in our markets 
at the expense of protection for everyday investors.
  Most publicly traded firms are audited by public accounting firms, 
which, in turn, are overseen by the PCAOB. This gives investors 
confidence that the books are accurate. China, however, refuses to let 
the PCAOB review its auditors.
  The result? At best, investors lack confidence in the validity and 
reliability of a company's financial data. Even worse, thousands of 
investors are downright defrauded. The worst case scenario--American 
savers are unwittingly funding efforts by Chinese SOEs to usurp 
America's global supremacy and compromise U.S. national security.
  I was proud to serve on the House China Task Force, where we closely 
examined, among other things, China's participation in U.S. capital 
markets. Earlier this year, we published a report with over 130 
recommendations--most of which are bipartisan. Passage of the House 
companion to S. 945, sponsored by Mr. Sherman, was among the 
recommendations.
  Also among the recommendations was passage of my bill, the 
Transparency in Chinese Government Investment Act, which would direct 
the SEC to investigate whether disclosure of a business's ties to the 
CCP or other malign Chinese initiatives is material for investors; and, 
if so, require companies to report.
  We can no longer allow China to take advantage of our rules, defraud 
our investors, and challenge the spirit of free enterprise. I urge 
support of S. 945.

                              {time}  1645

  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Missouri (Mr. Clay) that the House suspend the rules and 
pass the bill, S. 945.
  The question was taken; and (two-thirds being in the affirmative) the

[[Page H6035]]

rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________