Securities Litigation Partner Authors Article on IPO Gap for Foreign Private Issuers

Corporate Compliance Insights | May.11.2012

This article, authored by Los Angeles securities litigation and regulatory enforcement partner Michael Tu, discusses the JOBS Act and its provisions on foreign issuers listing in the United States. An excerpt from the article is included below.

While the U.S. capital markets are still considered by most companies as the most desirable place to be listed, increasing numbers of foreign-based issuers that might have sought a listing on a U.S. exchange in years past are voluntarily going to overseas exchanges in Asia and Europe. Indeed, within the last two years, a sizable and growing number of Chinese companies, particularly technology companies, have announced their intention to delist from the U.S. in favor of Hong Kong.

The reasons for this are many and go beyond the changing conditions in the U.S. markets themselves. For example, a publicized tightening of regulatory and disclosure requirements on foreign issuers was recently implemented by the Securities and Exchange Commission (in response to corporate governance and accounting issues involving Chinese companies), which further increased the burdens associated with a U.S. public offering of a foreign-based company.