In the letter addressed to SEC Commissioner Gary Gensler, Rubio pointed out that Shein’s US IPO approving process should be revoked if the company fails to provide “enhanced disclosures,” in a bid to protect US investors.
Rubio alleges that Shein reached out to Chinese regulators to gain approval of its IPO, scrutinising a possible deception of US authorities and regulators about the business and associated risks of the company’s functioning in China.
According to him, the Singapore-headquartered company has “close collaboration” with Chinese regulators which he believes is a cause of concern and raises serious doubts about the accuracy of Shein’s IPO filings.
He further claimed that the fast-fashion company presents itself as a “global” company to hide its ties with the People’s Republic of China (PRC) and the Chinese Communist Party (CCP), accusing Shein of being a “China-based company” instead.
Rubio said: “Shein also sources, manufactures, and ships most of its apparel from a massive network of factories in the PRC. Shein’s operations in the PRC mean it is subject to the whim of the Chinese government, and by extension the Chinese Communist Party (CCP). In short, Shein is not a “global” company. It is a China-based company.
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“Recent news articles reveal the company approached the China Securities Regulatory Commission (CSRC) and Cyberspace Administration of China (CAC) to approve its IPO in the United States. These Chinese regulators reportedly are holding discussions with the company’s senior executives about the IPO. They are also investigating Shein’s data-security practices to prevent information about the company’s employees, suppliers, and contract manufacturers from leaking outside of the PRC.”
Rubio emphasised that Shein should be required to make minimum disclosures which include the “acknowledgement” that a majority of Shein’s operations are in the PRC. He further believes these disclosures are “true” and “essential” for anyone to fairly appraise the risk of investing in Shein.
Shein did not return request for comment when approached by Just Style.
In addition to this, the company is facing a cybersecurity probe from the Cyberspace Administration of China (CAC) as it is in the process of acquiring a US IPO. The CAC launched an investigation into how Shein stores and uses information it holds on partners in China, according to the Wall Street Journal.
It said that despite not selling in China, the company was founded in the country before moving its headquarters to Singapore and retains close ties with its clothing suppliers.
Shein confirmed its plans of filing a US IPO in November last year. At that time, it said the plans were to extend its global footprint and address concerns over forced labour and climate change.
