Over the past year and a half, there has been a new wave of Chinese companies listing their shares on U.S. exchanges.1 Unlike the earlier trend of Chinese companies listing through reverse mergers with U.S.-listed companies, more recently Chinese companies have begun directly issuing securities publicly on U.S. exchanges.2 By listing shares on U.S. exchanges, many of those companies are for the first time subjecting themselves to U.S. securities laws, including periodic filing requirements and potential liability for material misstatements under Section 10(b) of the Securities Exchange Act and similar provisions.
Chinese companies that go through the intensive regulatory process of a U.S. public offering are unlikely to face the extraordinarily high level of securities litigation faced by Chinese reverse-merger companies over the last several years.3 Nonetheless, given the percentage of public companies typically subject to federal securities class actions in any given year and the high correlation between initial public offerings and federal securities litigation, at least some of these newly-listed Chinese companies may face securities fraud lawsuits in the coming months and years.4
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