FCA threatened with legal action over Shein London listing plans
A human rights group has threatened the Financial Conduct Authority (FCA) with legal action if it green-lights Shein’s plans to float on the London Stock Exchange.
Chinese-founded online retailer Shein has reportedly drawn up plans to float in the City later this year but has faced backlash from campaigners and lawmakers over its supply chain practices.
The company has previously been accused of using forced labour in some of its third-party manufacturing facilities, including in the Xinjiang region, where the Chinese government is accused of persecuting the Uyghur Muslim minority.
Stop Uyghur Genocide, which wrote to the FCA last June highlighting its concerns over Shein’s supply chain, has now threatened the regulator with legal action if it allows the company’s float plans to go ahead.
In a letter to FCA executives, lawyers for the campaign group said that Shein’s listing would be “irreconcilable with the FCA’s statutory duty of integrity, its principles and standards as well as the protection of investors”.
The same group recently issued a dossier of evidence alleging supply chain abuses to a Select Committee before Shein’s senior lawyer appeared earlier this month.
The dossier is said to show “clear, identifiable links between cotton production in the Uyghur region and forced labour”. The group also pointed to publicly available evidence which it said links Shein’s supply chains to cotton produced in the Uyghur region.
Shein’s senior lawyer, Yinan Zhu, was lambasted by MPs at the Select Committee, accusing the retailer of behaviour that “bordered on contempt” after she repeatedly refused to answer questions.
Today, the group revealed it has now stepped up its pressure on the FCA by issuing a pre-action protocol letter by law firm Leigh Day, outlining the High Court challenge it plans to issue if the FCA approves an IPO prospectus of Shein.
Good Law Project has also joined in the legal fight, offering the campaign group help to meet legal costs.
Leigh Day lawyer Ricardo Gama said that “our client believes that the FCA has a duty to make sure that the London Stock Exchange isn’t used as a way to raise capital for companies which have a high risk of financial crime.”
“The FCA has previously issued guidance saying that companies which produce cannabis-based products will not be allowed to list in London, because possession of cannabis is still an offence in the UK. It would be surprising, and unlawful, if the FCA decided to take a less robust approach to allegations of forced labour,” he added.
The FCA was approached for comment.