Wall Street just got a stark reminder that “China business as usual” is no longer risk-free. Late Thursday the House Select Committee on the Chinese Communist Party subpoenaed JPMorgan Chase CEO Jamie Dimon and Bank of America CEO Brian Moynihan for failing to hand over documents tied to their underwriting of the May IPO for battery giant CATL, a company the Pentagon lists as linked to Beijing’s military-civil fusion program.
A congressional committee focused on the national security threat posed by China subpoenaed the chief executives on Wednesday after the institutions worked on the Hong Kong listing of Contemporary Amperex Technology, or CATL, which supplies batteries to global electric-vehicle makers like Tesla.
That committee, known as the House of Representatives’ Select Committee on the Chinese Communist Party, had in April urged JPMorgan and Bank of America to pull out of their roles in CATL’s listing.
CATL had been added to a list of companies the Department of Defense identifies as military in nature, and the committee warned that participating in the IPO exposed the banks to “serious regulatory, financial, and reputational risks.”
JPMorgan and Bank of America proceeded with helping underwrite CATL’s IPO, which raised $5.2 billion in May, making it the largest listing this year.
Wednesday’s subpoenas are part of the committee’s investigation into the policy and regulatory implications of U.S. banks underwriting Chinese military companies, according to letters viewed by The Wall Street Journal.
“CATL’s industry-leading role in battery manufacturing—a sector explicitly targeted by China’s state-driven military-civil fusion policy—poses significant U.S. investor and national security risks,” said Rep. John Moolenaar (R., Mich.), chairman of the committee, in the subpoena.
In its subpoenas, the committee said the banks failed to produce previously requested information related to the IPO.
The House panel’s subpoenas signal rising legal and reputational risks for both banks. Their involvement with a company the Pentagon has linked to China’s military underscores the possibility that future U.S. sanctions could leave underwriters exposed to allegations of facilitating prohibited transactions, casting doubt on assurances that their China‐related due-diligence processes are fully robust.
Congress has moved from rhetoric to subpoenas, and the next step could be hearings—or legislation restricting U.S. financing of Chinese firms with military ties. Shareholders need clear, audited disclosure of China risk before the legal bills arrive.
