Sen. Bill Hagerty of Tennessee and Sen. Chris Van Hollen of Maryland said they want the Securities and Exchange Commission (SEC) to see if Didi came out transparently enough regarding the contact it had with Chinese regulators before it listed shares, according to FT. Those concerns were spurred by China’s internet regulator’s request that the Didi app be taken off the domestic stores, citing concerns of data security.
Now, as shareholders file lawsuits, Van Hollen said he thinks U.S. investors need to be confident that companies listing on U.S. exchanges aren’t committing fraud, FT reported. He said shareholders should be able to get information on the risks involved with investing in foreign companies.
The central question is what Didi might have told investors before it went public, as the company was known to have participated in a meeting with Chinese regulators in May, according to FT.
Didi raised $4.4 billion in its initial public offering (IPO) last week. It was the largest Chinese offering since the one for Alibaba in 2014.
Days later, a Chinese regulator said the company had violated laws on collecting and using personal information. It also made numerous requests for changes to the app prior to the listing, which Didi complied with, FT reported.
The regulator advised Didi to delay its listing, FT reported, citing an unnamed source. The company, in response, said it didn’t know about the regulatory crackdown by the government.
PYMNTS reported this week that Didi warned of a revenue drop because of the order to remove its apps from app stores in China. But the company also didn’t find it a good idea to wait on its IPO.