Inequities in Corporate and Securities law: Disabling the Exploitative Chinese Corporation and Charting a Path to International Commercial Accountability

This article seeks to illuminate these issues and provide a roadmap for the U.S. federal and state legislatures to come together to protect the U.S. investor from the type of accounting fraud and stock misinformation that was the impetus behind enacting the Sarbanes-Oxley Act of 2002. First, this article will discuss the legal backdrop and legislative policy behind U.S. laws such as SOX and its enforcement mechanisms, and the ability for shareholders to bring securities class action derivative actions for financial fraud. This article will also discuss trade secrets laws, criminal extradition treaties, international enforcement of judgments, and elucidate the reverse merger process in the states, particularly in Delaware. Second, this article will illustrate just how Chinese corporations exploit the current state of the law and diplomatic relations with the United States to unfairly manipulate U.S. investors.

Finally, this article will provide two complementary solutions to pave the way to achieving international commercial accountability, by a protectionist scheme involving both the federal government and state legislatures and by international diplomacy and legal pressure.