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The head of a cross-party group of MPs has written to the bosses of the UK Financial Conduct Authority and the London Stock Exchange to raise concerns about fast fashion group Shein ahead of its scheduled IPO.
Liam Byrne, who chairs the Commons Business and Trade Select Committee, said MPs had doubts about the integrity of Sheen's supply chain after hearing…Controversial evidence” from the company this week as part of a wider investigation into employment rights in the workplace.
Byrne wrote to Nikhil Rathi, chief executive of the Financial Conduct Authority, and Dame Julia Huggett, head of the London Stock Exchange, to say the commission was “struggling to get transparent answers from Sheen about its trading practices”.
The two organizations were asked for more details and checks on the listings after a senior Shen employee refused to answer multiple questions about whether the cotton it uses in some of its products comes from China's Xinjiang region, a region linked to accusations of the use of forced labor. , in addition to plans to pursue a listing in London this year.
Shein, founded in China and headquartered in Singapore, uses thousands of manufacturers in China to manufacture its clothing and then sells it at rock-bottom prices globally.
It has thrived since the Covid-19 pandemic, but has also faced allegations of poor labor practices in its supply chain. The company has repeatedly said it has a “zero tolerance policy” regarding forced labour, and it is understood that much of the cotton it produces comes from Australia and the US.
“We look forward to setting out our role in our response to the committee,” the FCA said in response to Byrne’s letter.
Hereditary She told the Financial Times last month that the FCA's decision on whether to allow a company to list in London would depend solely on its disclosures, not “every aspect of a company's behaviour”.
Without commenting specifically on Sheen, Rathi said it was “not unusual” for UK-listed companies to take legal risks around the world and “what is important is that they disclose it, that investors understand it, and they can price that risk.”
Before a company can list in the UK, the Financial Conduct Authority (FCA) checks that its prospectus contains all the elements it must, but it does not check the accuracy of this information.
Any inaccuracies or omissions later discovered could lead to investor litigation and FCA enforcement action.
Rathi is accompanying British Chancellor Rachel Reeves on a three-day trip to China this weekend and could discuss Chen's listing plans with his counterparts in Beijing.
Also participating in the delegation is David Schwimmer, CEO of LSEG, which owns the London Stock Exchange.
Bern He said he was “deeply concerned about the lack of frank and open answers to some very simple, basic questions” from Sheen about its supply chain in his letter to Huggett.
He asked whether LSEG was able to verify “the statements of companies seeking listing, paying particular attention to their safeguards against the use of forced labor in their products.”
He wrote to Rathi, wanting to know what controls were in place to ensure companies disclosed legal risks to potential investors in their listing documents.
LSEG and Shein did not immediately respond to a request for comment.
