The CEOs of JPMorgan JPM and Bank of America BAC have reportedly been subpoenaed by U.S. lawmakers over their roles in the IPO of a Chinese battery company.
What Happened: The House Select Committee on the Chinese Communist Party has called on JPMorgan and Bank of America to provide documents concerning their involvement in the IPO of Contemporary Amperex Technology (CATL), a major supplier of batteries to global electric vehicle manufacturers, including Tesla Inc. TSLA, reported The Wall Street Journal.
The committee, focused on the national security threat posed by China, had earlier cautioned the banks about the "serious regulatory, financial, and reputational” risks of participating in the IPO of a company the Department of Defense had flagged for its military affiliations.
Despite the warning, JPMorgan and Bank of America went ahead with underwriting CATL's IPO, which raised $5.2 billion in May through the listing and an overallotment option that was fully exercised.
Why It Matters: The IPO of CATL, which is a major player in the global electric vehicle battery market, was a significant event. The company’s shares soared 12.5% in their Hong Kong trading debut after raising $4.6 billion, making it the largest listing of the year. This IPO was a strong indication of market confidence in CATL, despite the ongoing U.S.-China trade tensions.
This incident also comes amid growing concerns over national security implications of US firms’ involvement with Chinese companies. Earlier this month, Microsoft Corp. MSFT announced it would no longer use China-based engineers to provide technical support for U.S. military cloud services, following backlash from Washington and a revealing ProPublica report.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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