July 7, 2020
Dear Chairman Clayton and Roundtable Participants:
I am an American investor in GSX TechEDU. As others have already documented, this is a company whose fraudulent behavior is well-known, and its victims are awaiting justice.
As an American, I feel that I can invest with confidence into securities listed on the NYSE, and that companies with improving financial performance are rewarded with higher stock prices. This implies that the opposite is also true: that prices go down for companies that do not perform well. Ever since Alexander Hamilton started the NYSE, that has been the goal.
Little did I know that many PRC companies are not audited according to American standards and that fraudulent companies can take refuge from the jurisdiction of the SEC. By deferring to PRC regulators, the SEC is leaving many American investors exposed to fraud, not realizing that, unlike the vast majority of NYSE securities, Chinese corporations are free to perpetuate their scams right under the noses of American securities regulators.
Please take action to either end the fraud, or at least to attach a surgeon general's warning for American investors, with flashing red letters. I can recommend some wording here:
WARNING
These companies are not audited according to recognized GAAP standards. The financials these companies report might as well come straight out of Alice in Wonderland. The SEC is either unable, or unwilling, to protect American investors, and
YOU ARE ON YOUR OWN
Please send all complaints to securities "regulators" in the People's Republic of China.
Thank you for your attention and prompt action on this matter.
Randall D. te Velde
Leverett, Massachusetts