RELEASE: CPDC Urges Biden to End the CCP’S Privileged Access to US Capital Markets And Unwitting Investors
For Immediate Release
August 2, 2021
Hamilton Strategies, [email protected]
Beth Harrison, 610.584.1096, ext. 105
or Deborah Hamilton, ext. 102
C.P.D.C. Urges Biden to End the C.C.P.’S Privileged Access to U.S. Capital Markets And Unwitting Investors
Open Letter Calls for End to Such Abuses as Variable Investment Entities and A Shares
WASHINGTON, D.C.—Two top members of the Committee on the Present Danger: China (CPDC), Chairman Brian Kennedy and internationally renowned financier Kyle Bass, wrote President Joe Biden today in the wake of losses of over $400 billion by U.S. investors in Chinese Communist Party-tied businesses. The letter urges an immediate end to an arrangement facilitated by then-Vice President Biden in May 2013 that has allowed the CCP to extract a trillion or more dollars from American stock and bond markets without having to conform to this country’s securities laws and regulations designed to protect investors from abuses by non-transparent and/or accountable companies.
The CPDC missive amplifies on points made in a letter seven U.S. Senators sent last week to the new Chairman of the Securities and Exchange Commission, Gary Gensler. The legislators explicitly warned about the use of so-called Variable Interest Entities (VIEs) to create the false impression of ownership when, in fact, investors are dealing with shell companies. As Messrs. Kennedy and Bass observed: “Owning a VIE share is analogous to playing fantasy football with American investors. Unlike capital structures where equity investors have a claim to assets behind the banks and bondholders, U.S. investors have no claim to anything in the event of a bankruptcy.”
And, Messrs. Kennedy and Bass noted that, in their warning about Wall Street’s connivance with the Chinese Communist party, the Senators “implicitly raised an alarm about another favorite of the CCP and its ‘old friends’ on Wall Street: the inclusion of Chinese Communist companies’ so-called ‘A shares’ in index funds, especially Exchange-Traded Funds, benchmarked against various indices such as those offered by MSCI, FTSE Russell, S&P and others. These passive investment vehicles – and the many unregulated corporate A shares they include – represent the single greatest capital markets threat to America’s national security and fundamental values.”
The Committee on the Present Danger: China signatories concluded by urging President Biden:
“To minimize the risk of any more devastating U.S. investor losses in non-compliant and/or malign Chinese stocks and bonds, and other transfers of wealth from the American investing public to the coffers of the CCP, we call on you to direct your Wall Street-friendly Securities and Exchange Commission, as well as Department of the Treasury, to ban forthwith: 1) the use of fraud-prone VIE structures for listing or trading on U.S. exchanges: and 2) the holding by U.S. persons worldwide of A shares drawn directly from Chinese domestic exchanges and sluiced by BlackRock, Vanguard and other U.S. fund managers directly into the retirement and other portfolios of as many as 100 million or more Americans retail investors.”
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To interview representatives of the Committee on the Present Danger: China, contact [email protected], Beth Harrison, 610.584.1096, ext. 105, or Deborah Hamilton, ext. 102.
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