
US-China commission warns of fraud risk
Daily news headlines
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
SVB wouldn’t happen in Europe, says Deutsche CIB head
Campelli also thinks Credit Suisse’s bailed-in AT1 bonds acted as originally intended
How Finma milked Credit Suisse’s CoCos to close UBS deal
An unusual clause in Swiss AT1 bonds allowed them to be written off, but could others follow suit?
Fed’s climate stress test whips up storm for banks
Long-awaited US climate risk exercise puts tough pressure on banks’ data and models
EU banks need ‘billions’ in hedges to pass new NII test
Declines in net interest income can be hedged, but the markets may struggle to handle the demand
CFTC chair gloomy over crypto legislation prospects
FIA Boca 2023: Behnam also asks Congress to grant more powers to regulate third-party tech providers
Missing Basel metric could have revealed SVB risks
US regulators did not implement economic value of equity test that SVB failed badly in 2021
Strict term SOFR trading rules ‘permanent’ says Fed’s Bowman
Official says restrictions on use of term SOFR swaps “should not be expected to change”