Senior Labour MP raises ‘concerns’ with City regulator over planned Shein listing

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The chair of a cross-party group of MPs has written to the heads of the UK financial watchdog and the London Stock Exchange to raise concerns about fast-fashion group Sheen ahead of its planned IPO.

Liam Byrne, chairman of the House of Commons business and trade select committee, said: “MPs questioned the integrity of Schein’s supply chain after the hearing.Controversial evidenceby the company this week as part of a wider inquiry into employment rights in the workplace.

Byrne wrote to Nikhil Rathi, chief executive of the Financial Conduct Authority, and Dame Julia Hoggett, head of the London Stock Exchange, that the committee had “struggled to get transparent answers from Sheen about their business practices”.

He asked both companies to check more details and listing processes after a senior Shin employee refused to answer a series of questions about whether the cotton used in some of its products came from China’s Xinjiang region, an area linked to allegations of forced labor. . , as well as planning to follow a listing in London this year.

Shin, which was founded in China and is based in Singapore, uses thousands of manufacturers in China to make its clothes and then sells them around the world at ultra-low prices.

It has grown since the Covid-19 pandemic but has faced allegations of poor work practices in its supply chain. The company has repeatedly said it has a “zero-tolerance policy” on forced labor and is understood to source most of its cotton from Australia and the United States.

The FCA responded to Byrne’s letter, saying: “We look forward to setting out our role in our reply to the committee.”

the chariot It told the Financial Times last month that the FCA’s decision to approve a company to list in London would depend only on its disclosures, not “every aspect of their corporate conduct”.

Without commenting specifically on Schein, Rathi said it was “not unusual” for UK-listed companies to carry legal risks around the world and “the important thing is that they disclose it, investors know it. understand and they can value that risk”.

Before a company lists in the UK, the FCA checks that its prospectus contains all the information it should, but does not check the accuracy of this information.

Any errors or omissions discovered later could lead to investor litigation and FCA enforcement action.

Rathi is accompanying UK Chancellor Rachel Reeves on a three-day visit to China this weekend and may discuss Xi’s list plans with his counterparts in Beijing.

David Schwimmer, chief executive of LSEG, owner of the London Stock Exchange, is also part of the delegation.

Byrne said he was deeply concerned about the lack of frank and open answers to some very simple, basic questions about Shin’s supply chain in his letter to Hoggett.

He asked whether LSEG had been able to verify “statements by companies seeking to list specifically about their protection against the use of forced labor in their products”.

Writing to Rathi, he wanted to know what checks are in place to ensure companies disclose legal risks to potential investors in their listing documents.

LSEG and Shein did not immediately respond to a request for comment.