US Senators Urge SEC to Open Probe into Didi IPO

Two US senators have urged the Securities and Exchange Commission to open an investigation into Chinese ride-sharing company Didi Chuxing (NYSE: DIDI), to determine whether it deceived US investors prior to its IPO debut.

The two senior Congress members, Republican senator Bill Hagerty and Democratic senator Chris Van Hollen, have called on the SEC to investigate whether or not Didi intentionally concealed previous discussions with Chinese regulators ahead of listing its US shares on the New York Stock Exchange.

“The Biden Administration and the SEC— whose core mission is to protect investors and maintain fair markets— should look into whether American investors were misled,” Hagerty explained to the Financial Times. “The SEC must enforce its transparency and disclosure rules, and American investors need to be fully aware of the inherently different risks of investing in companies from non-market, government-controlled economies such as China.”

Since it first began trading on the NYSE last week, shares of Didi have plummeted by over 25%, after a China-based internet regulator removed the company’s app from domestic stores, citing issues pertaining to data security. The sharp decline in Didi’s stock lead to an onslaught of lawsuits from American shareholders.

Since the IPO debut, Didi has successfully raised more than $4.4 billion in funds, marking the largest offering to US investors by a Chinese company since Alibaba went public in 2014. However, several days later, the Chinese internet regular alleged that Didi had significantly violated a number of privacy laws pertaining to the collection and use of users’ personal information.

An individual close to Didi had revealed that the Chinese regulator had cautioned the ride-sharing company to postpone its listing, the Financial Times previously reported. However, Didi rebuffed the claim, instead insisting that it did not have prior knowledge of the forthcoming regulatory restriction. In addition, the Financial Times also reported that the internet regular had made over 20 appeals for changes to the app, of which Didi followed through with prior to its public debut.

As a result, Didi’s IPO has raised concerns regarding information that may have been concealed from American investors prior to the IPO. Although Didi did reveal in its filing with the SEC that it did in fact meet with a number of Chinese regulators back in May, the company failed to specifically disclose that it had received requests to adjourn its IPO or make changes to its app.

“The SEC should thoroughly investigate this incident to see if investors were intentionally misled by Didi’s public disclosures,” said Hollen.


Information for this briefing was found via the Financial Times and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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