The Strategist

Bloomberg: Nasdaq increases scrutiny of Chinese and Hong Kong companies IPOs

06/21/2024 - 09:26

As Bloomberg notes, citing sources, Nasdaq has tightened its oversight over small initial public offerings (IPOs) by Chinese and Hong Kong companies.

Dries Buytaert
Dries Buytaert
Bloomberg reports, referring to sources, that the Nasdaq market in the United States has tightened regulation over small initial public offerings (IPOs) of Chinese and Hong Kong companies' shares in order to prevent significant price swings that were seen at IPOs of a similar nature two years prior.

According to the sources, Nasdaq has been questioning a number of Chinese and Hong Kong IPO registrants on the independence and identity of the selling stockholders. They claimed that the authority was especially curious about their histories, relationships to the business, and to one another.

Besides, Nasdaq has occasionally requested documentation attesting to the private share valuation and the money transfer involved in the acquisition.

According to Bloomberg, evidence of investor independence is required in order to allay concerns about a pump and dump schemeā€”a term used to describe the manipulation of assets when their value is artificially boosted in order for them to sell off at their peak. No scheduled Chinese initial public offerings (IPOs) have been called off as of yet, according to sources close to Bloomberg. However, the weeks-long procedure will raise costs and cause additional uncertainty.