US regulator freezes Chinese company IPOs

The US Securities and Exchange Commission (SEC) has stopped processing registrations of US initial public offerings (IPOs) and other sales of securities by Chinese companies while it crafts new guidance for disclosing to investors the risk of a new regulatory crackdown by Beijing, according to people familiar with the matter.

Chinese listings in the United States have reached a record $12.8 billion so far this year, according to Refinitiv data, as companies swooped in to capitalize on the US stock market reaching daily record highs.

Deal flow slowed down substantially this month after Chinese regulators banned ride-sharing giant Didi Global Inc from signing up new users just days after its blockbuster IPO. They followed up with crackdowns on technology and private education companies.

SEC commissioner Allison Lee said on Tuesday that Chinese companies listed on US stock exchanges must disclose to investors the risks of the Chinese government interfering in their businesses as part of their regular reporting obligations.

The SEC has asked companies not to submit any registrations for the issuance of securities until it gives them specific guidance on how to disclose the risks they face in China, the sources said. It was not immediately clear how long this would take.