Comptroller Elise Nieshalla testifies before the Senate Elections Committee on Monday, Jan. 13, 2025. (Leslie Bonilla Muñiz/Indiana Capital Chronicle)
Indiana, alongside 20 other states, penned a letter last month urging the Securities and Exchange Commission to investigate delisting China-based companies on U.S. stock exchanges “to protect American investors.”
Indiana Comptroller Elise Nieshalla and other state financial officers said there is a growing risk posed by the China-based companies due to Chinese Communist Party interference and widespread failures to meet U.S. transparency, accounting and auditing standards.
“As stewards of invested public funds, we have a responsibility to protect our beneficiaries from foreign entities to seek to exploit our capital markets while evading accountability,” Nieshalla said in a press release.
The letter highlights the Chinese Communist Party’s crackdown on independent due-diligence firms and points to findings by the Public Company Accounting Oversight Board that revealed auditing failures among Chinese companies. It also states that the CCP’s systematic use of Variable Interest Entities — an organization that is controlled through contractual agreements rather than direct ownership — prevents U.S. investors from owning the company.
The state financial officers also direct the SEC to investigate potential violations of the Securities Exchange Act, including disclosure of controls and procedures, internal financial reporting mechanisms, falsified accounting records and manipulative or deceptive practices. They alleged that the CCP’s efforts to suppress transparency exacerbated these issues.
“As state financial officers, part of our responsibility is to ensure that the American people’s finances – and our American financial system – are protected from foreign actors who mean to do us harm,” the signatories said in the letter.
Indiana has recently purged Chinese companies from state investments.
In 2023, legislation was passed that required the Indiana Public Retirement System to divest from any entities that do military or intelligence work or are controlled by the Chinese government. Within a year, INPRS eliminated its $1.2 billion worth of investments in Chinese entities.
