The Securities and Exchange Commission of the United States has been discussing the Foreign Company Accountability Act, and Congress has also passed this law. On March 24th, the US Securities Regulatory Commission issued a 53-page announcement on what to do if foreign companies fail to meet the requirements of foreign companies listed in the US.
The Foreign Corporate Responsibility Act requires foreign companies listed in the United States to improve information transparency, and requires all companies to meet the requirements of American auditing and abide by the rules of American auditing. Then the core of this rule is to check the original accounting vouchers of listed companies, and China companies are faced with the law of China that companies listed overseas are not allowed to bring accounting vouchers and other relevant legal documents abroad. So the enterprise stuck in the middle is in a dilemma. Can't meet, three years later, Chinese companies are facing delisting in the United States. Sina has been privatized and delisted some time ago.
According to reports, last Friday's big transactions came from Goldman Sachs and Morgan Stanley, involving Baidu/KLOC-0.0 million shares, Tencent Entertainment 50 million shares, Vipshop 32 million shares and iQiyi 32.7 million shares. Who do these shares belong to? It belongs to the hedge fund ArchegosCapital, which borrows a lot of money from Goldman Sachs, Credit Suisse, Morgan Stanley, Nomura and other institutions, holds Viacom, Discovery, Baidu, Tencent Music and other related stocks in heavy positions, and then takes these stocks as collateral from those institutions that borrowed money.
Viacom Group is the third largest media company in the United States, including TV group with 39 local TV stations and Paramount TV group which has produced more than 5,500 hours of programs. ArchegosCapital is used to using high leverage, and it is said that the leverage has increased to three or four times. After Viacom announced the issuance of US$ 3 billion on March 23rd, its share price began to plummet, with a drop of 52.7% from US$ 10 1.97 to US$ 48.23. However, ArchegosCapital, who is in a heavy position in Viacom, was asked to supplement the deposit because of the sharp drop. ArchegosCapital could not submit the deposit any more, and the shares of collateral began to be sold by Goldman Sachs and Morgan Stanley, which led to a large transaction of Shangtongwu. When the stock is sold in large quantities, the stock price continues to fall. After the sale, the two companies said that there was almost no loss. Of course, the biggest loss is ArchegosCapital, who likes to invest with 3-4 times leverage. Sadly, however, Deutsche Bank, Goldman Sachs and Morgan Stanley, which borrowed money, all sold the mortgaged shares, but Nomura and Credit Suisse did not sell the collateral. Credit Suisse had to announce that on March 26, they suffered heavy losses in the transaction with customers, with losses of about $3-4 billion.