Baidu

Decline in Baidu shares. It is one of 5 stocks added to the SEC’s delisting watch list.

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Baidu

Shares fell on Thursday after U.S. regulators added the Chinese search giant to its growing list of companies that could be delisted from U.S. exchanges.

The Securities and Exchange Commission on Wednesday added Baidu (ticker: BIDU) and four other Chinese companies to a provisional watch list of foreign companies that face delisting if they do not allow U.S. regulators to review their audits for three consecutive years. Chinese law currently prohibits companies from doing so.

Baidu shares in Hong Kong fell 3.4%. Baidu’s U.S. certificates of deposit were down 2% pre-market on Thursday after falling 2.6% on Wednesday.

In a statement on Thursday, Baidu said it understands the SEC action may result from the filing of its annual report on Form 20-F for the fiscal year ended Dec. 31, 2021.

“The Company understands that the SEC has made this identification pursuant to the [Holding Foreign Companies Accountable Act] and its implementing rules issued thereunder, and it indicates that the SEC determines that the company used an auditor whose working paper cannot be fully inspected or studied by the Public Company Accounting Oversight Board.

“The company has actively explored possible solutions,” Baidu said in the statement, adding that it will continue to comply with applicable laws and regulations in China and the United States and “will strive to maintain its listed status. Nasdaq and Hong Kong Stock Exchange Limited.

The SEC has also added an online brokerage platform

Future Holdings

(FUTU), aquaculture equipment supplier

Nocera

(NCRA), biopharmaceutical company

Casi Pharmaceuticals

(CASI), and video streaming platform

iQIYI

(IQ) to its provisional list of potential delistings, bringing the total number of companies identified by the regulator to 11.

The SEC’s delisting campaign targeting Chinese companies is adding further uncertainty to volatile Chinese tech stocks, which have been under pressure following Beijing’s crackdown.

Write to Lina Saigol at [email protected]