US-China commission warns of fraud risk
US government hears recommendations on Chinese sovereign wealth funds
WASHINGTON, DC – The US-China Economic and Security Review Commission has recommended to US Congress increased controls over Chinese sovereign wealth funds, to reduce insider fraud risk.
National security questions have been raised by recent injections of Chinese capital into the US economy in the form of sovereign wealth funds; increasingly becoming a political rather than economic debate.
“The US economy must remain open for investment. I think we all agree on that. However, some observers have questioned whether one nation’s sovereign investments could lead to influence over key industries, access to technology, or influence over another nation’s policies,” said the Commission’s chairman, Larry Wortzel, to Congress.
Sovereign wealth funds could have access to government officials and information that is not available to other investors.
“We are concerned that some sovereign wealth funds, or persons associated with them such as some hedge funds, might undermine market integrity by engaging in insider trading or other market abuses,” said Linda Chatman Thomsen, director in the division of enforcement at the SEC.
“We are concerned that if the government from which we seek assistance is also controlling the entity under investigation, the nature and extent of co-operation could be compromised,” said Thomsen.
Sovereign wealth funds have invested $44.3 billion in US banks, brokers and financial firms since 2006, according to consultancy Federal Financial Analytics.
The SEC has already highlighted Chinese insider-trading risks. On February 5 it said it had settled with a former Dow Jones board member and three other Hong Kong residents accused of insider trading and illegal tipping before news of an unsolicited buyout offer by News Corporation sent Dow Jones shares soaring last year.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Bank of Communications moves early to meet TLAC requirements
China Construction Bank becomes last China G-Sib to release TLAC plans
Most read
- Top 10 operational risks for 2024
- Top 10 op risks: third parties stoke cyber risk
- Japanese megabanks shun internal models as FRTB bites