Scc temporarily halts approvals of new chinese ipo. The sec is specifically concerned about chinese companies that are structured as so-called variable interest entities, although they're based in china, these companies are set up as an offshore shell company, often in a tax-friendly place like the cayman islands. My name is tom nash and i quit my corporate job as a senior financial analyst to break down companies for you there's one thing you need to know about me: i don't take from anybody hey. This is tom and we have some breaking news about chinese talk.

You absolutely got ta hear this is seismic cataclysmic level event that you absolutely do not want to miss now, for the past few weeks, i've been talking about chinese talk and i've basically been telling you hey. This is getting a little bit dicey, i'm not even talking about the fact that that made a dude disappear, a billionaire because they didn't like what he said in some interview. Not even talk about the fact that they cancelled the biggest planned ipo in asia, which was ant, i'm just talking about the stuff they just did this week now. The bottom line here is, as always in my videos comes first, the sec has essentially halted froze whatever you want to call it.

Stop all chinese ipos until further notice. This is a huge deal. Basically, the sec just said: hey. We want to figure out what the hell is going on here before we let any more chinese companies ipo in the us.

Now that's the bottom line, but i'm going to tell you the whole story and it's going to make. You fall off your seat. So don't click, nothing, don't smash, nothing don't buy. Nothing! Don't subscribe to nothing! No courses, no affiliate links, no sponsorships, just your attention.

So what the hell is going on here, so we're not even gon na go back to the point where they made a billionaire disappear. Take a little vacation for a couple of weeks because he said something they didn't like we're, not gon na go back to them. Canceling the ant ipo, which was the biggest ipo in asia ever essentially for no reason. We're not gon na talk about the fine on alibaba, none of that that's old news just compared to what they did last week.

That's just really old news. Just last week they canceled didi retroactively after the ipo costing people billions of dollars, but did he was just one victim here? There were other companies, tencent basically got shellacked and in case you think i'm bullshitting you. This is from july 24th. China orders tencent to give up exclusive music licensing rights as crackdown continues.

They just went after tencent, basically taking away actually nationalizing ip rights for music, now they're saying that tencent is providing opium for the masses. Stock goes down 10, just because some governmental agency put out government sponsored articles essentially sending the stock price 10 down, and that's just one example of the irrational, crazy, erratic behavior of the chinese regulators. This is insane and it's not even the end of the story. I told you in my last few videos that, even if you overcome the regulatory issues - and you might say well, the chinese government supports these types of companies.

It doesn't support these types of companies, so i'm going to invest in the companies they like yeah today. But what happens tomorrow, or in the year, you can't run an investment policy based on what the chinese government likes or doesn't like, but that's not even the end of it. Tencent basically was made to give back the royalty music. They have.

They cancelled education companies like a lot of crazy. You don't expect from a proper country with proper due procedure. Now this was insane. Essentially.

This was like looking at my kid throwing a tantrum throwing against the wall makes no sense. It doesn't even mean anything what the hell is going on so once we saw that that should have been enough for you. Now i've been beating the drum about chinese stocks for a while for months, and i've told you this isn't about china. This isn't about chinese people, nor about the chinese culture, which i absolutely love.

It's about the fact that, even if this thing was going on in greenland or finland or uzbekistan or russia, i don't told you the same thing: don't invest where the volatility is going crazy. It's just not a good investment risk management, wise, especially in an irrational place like china, where everything is not even economical. It's some weird ass, mind control game that they're playing against themselves. Now the things have changed now check this out.

This is a wall street journal article sec to set new disclosure requirements for chinese companies ipos. Now this is really important. The securities and exchange commission will increase scrutiny of chinese companies that aim to sell shares in the us following new chinese restrictions. Now this is really important.

This came out on july 30th. It's really important. This is a reaction to what's going on in china. Essentially, gary gensler basically saying well, i'm not going to let you go crazy if you're going to be behaving like that, we're going to limit you on the u.s side, a very nice reaction and as you can see right here, sec chairman gary genser said friday.

He has asked agency staff to seek specific disclosures from chinese firms before signing off on regulatory filings that precede initial public, offering basically he's saying: hey we're not going to let you go public unless we know what the hell is going on in china, you better get Your act together now this is really important, because this means a lot. The disclosure requirement outlined friday builds on guidance. The sec issued last year on risks associated with china-based companies. They focus on the structure, the vie, the variable interest entities - essentially that's the cayman island structure.

I've been talking to you about this is basically a confirmation to what i said that this structure is insanely dangerous. The whole idea in my last few videos was to explain to you that the legal structure of chinese companies being ipo'd in the us is just bananas. It makes no sense you as the shareholder own, a contractual right to a contractual right to contractual rights, to contractual right to a contractual right, 15 lines down more 15 contractual rights to the actual company that holds the assets. Now, in this situation, you literally have no property rights in the company.

You think you're holding shares of you're holding some phantom shares of nothing and you literally have no recourse if you get screwed, because the only company that owes anything to you is a kingman island company that, by the time that this thing hits the fan, it's gon Na be basically empty of anything, so you're gon na be holding your shenanigan with your hands, basically crying for the sky, which is very similar to what's going on right now and in case you've been wondering. This is what it looks like in real life. You, as the investor in the new york circuit change or the nasdaq, are getting shared in this company. This is a cayman islands company.

It owns another hong kong company, which owns another chinese company, which owns another chinese company, which owns another chinese company which actually owns the assets. You think you own, you don't own jack. You have contractual rights that go through five different companies until you get to the actual assets, you think your own and that's the entities which are often based in offshore jurisdictions such as ding ding, ding. They came in islands.

Allow us investors to get exposure to chinese companies through contracts. Now this is really important. Contractual rights are not the same as property rights any lawyer and by the way, if there's any lawyers watching this, please comment below and let people know that i know what i'm talking about. Contracts and property rights are completely different and should be priced differently.

And yet you have contractual rights being sold to people which are willing to pay the same price as if they're buying a property which they're not and gary genser understands this and kudos to him. He gets a lot of respect for me for getting this right. I worry that the average investor may not realize that they hold the stock in a shell company rather than a china-based operating company. Mr genser said in the statement: yes, finally, an sec chair that gets it and by the way the funny thing is all of this is listed in the prospectus.

There's an example here from the alibaba perspectives, where they literally come out and say: hey dear investors, if you invest with us, you should know that this thing might be canceled by the chinese government if they decide we're violating any existing or future laws and by the Way that itself is kind of insane. This is essentially a retroactive application of future laws on past behavior, which is insane only in china. I guess so. The chinese government have been going crazy.

Regulators have been going crazy, basically doing whatever the hell they want. Now, the sec, i will give you that they like to move slow, but now that they up from their seed they're about to go bananas on these guys for all china-based operating companies. Seeking to listen to us exchanges. The sec will require them to say whether they have received permission from the chinese authority to do so, as well as to disclose the risk that permission might be rescinded.

Mr genzer said: well, that's just the first move. I see this is way bigger than this. This is just the opening fire and, by the way, the case of dd, which they mentioned here is the perfect example. This is a rug poll you put in 4.4 billion of u.s investors money through the new york stock exchange in a chinese company.

Then china decides nomas two days after the ipo and basically everybody loses a big chunk of their money. That can happen again and again and again, and actually it can get worse, and i think gary genser is definitely doing the right thing. But i think this is just the beginning. Essentially the sec just came out and said: hey until we figure out what the hell is going on here: nobody's ipoing out of china in any u.s stock exchange.

This is a huge thing because it essentially says that these guys are guilty until proven innocent, which is exactly what i've been saying about. Chinese talk and obviously i'm not the only one who's thinking that kathy wood has just eliminated her entire chinese portfolio. For similar reasons, i would assume very dangerous, very risky, probably a good time to stay away from i mean now, we have this whole structure being attacked from both sides. The sec have now banned apos.

What will they do with existing companies? Obviously, they're not gon na be sitting saying well, i know we just banned all chinese companies from going public, but we're not gon na review. The existing structures come on think about it. Both of these countries are not going at these structures. Is that really a good time to get into chinese companies? Well, if you're a gambler, and you think that this is going to blow over, you might make a lot of money, but i don't invest based on gambling.

I invest based on risk management, and this risk is way too much for me. But again, i'm not a financial advisor, i'm just a guy on the internet. Sharing his opinion, which might be inaccurate, might be wrong, might be the ramblings of a madman. You have to do your own research, blabla, mother, effing blah.

Now i appreciate you joining me for this. I think this is only heating up. I think it's going to be a massive story to come. I've been saying this for months and every little thing that falls into place just proves that i was right now.

I know a lot of you still love your chinese talk and that's fine, i'm even going to be excited if you make some money, but for me i'm out.