A newly published rule brings the SEC closer to delisting stock of Chinese firms that don't allow themselves to be audited

• The SEC on Thursday moved closer to kicking out Chinese stocks that don't meet audit requirements.
• The regulator finalized rules to implement a law requiring Chinese companies and their auditors to open their books to US inspections.

Foreign companies are subject to delisting from the US stock market if their auditors skirt disclosure requirements, the US Securities and Exchange Commission said Thursday in finalizing a rule that puts it closer to kicking out non-compliant Chinese companies.

"If you want to issue public securities in the U.S., the firms that audit your books have to be subject to inspection by the PCAOB," said SEC Chair Gary Gensler in a statement, referring to the Public Company Accounting Oversight Board.

"This final rule furthers the mandate that Congress laid out and gets to the heart of the SEC's mission to protect investors."

Gensler warned in a September op-ed in the Wall Street Journal that his agency could crack down on trading in shares of about 270 China-linked companies by 2024 unless they allow their auditors to be inspected by US regulators.

The rule that the SEC finalized on Thursday will implement a law requiring Chinese companies and their auditors to open their books to US inspections.

China for more than a decade has refused to allow the PCAOB, which regulates accounting firms that oversee the books of public companies, to review audits of companies such as Alibaba and Baidu whose shares trade in the US.

"The Commission and the PCAOB will continue to work together to ensure that the auditors of foreign companies accessing U.S. capital markets play by our rules," Gensler said Thursday. "We hope foreign governments will, working with the PCAOB, take action to make that possible."