A senior Labor MP raised ‘concerns’ with the City’s regulator about the planned listing of Shein

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The chairman of a cross-party group of MPs has written to the heads of the UK Financial Services Agency and the London Stock Exchange to raise concerns about fast fashion group Shein ahead of its planned IPO.

Liam Byrne, who chairs the House of Commons business and trade select committee, said MPs had doubts about the integrity of Shein’s supply chain after hearing “disputed evidence” from the company this week as part of a broader investigation of employment law 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, saying the board had “struggled to get transparent answers from Shein about their business practices”.

He asked both organizations for more details and verification of the inventory process after a senior Shein employee refused to answer multiple questions about whether the cotton it uses in some of its products is from China’s Xinjiang region, an area linked to allegations of forced labor. , as well as plans to go public in London this year.

Shein, which was founded in China and is headquartered in Singapore, uses thousands of manufacturers in China to make its garments and then sells them at ultra-low prices globally.

It has boomed 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” on forced labor and most of its cotton is believed to come from Australia and the US.

The FCA said in response to Byrne’s letter: “We look forward to setting out our role in our response to the committee.”

Rathi told the Financial Times last month that the FCA’s decision on whether to grant the company authorization to list on the London stock exchange would depend solely on its findings, not on “every aspect of their corporate conduct”.

Without commenting specifically on Shein, Rathi said it was “not unusual” for UK-listed companies to bear legal risks around the world and “what’s important is that they disclose that, investors understand that and can appreciate that risk”.

Before a company can go public in the UK, the FCA checks that its prospectus contains all the elements it is supposed to do, but does not check the accuracy of that information.

Any subsequently discovered inaccuracies or omissions may lead to investor claims and FCA enforcement action.

Rathi is accompanying British Chancellor Rachel Reeves on a three-day trip to China this weekend and could discuss Shein’s listing plans with his counterparts in Beijing.

David Schwimmer, CEO of LSEG, which owns the London Stock Exchange, is also in the delegation.

Byrne said he was “deeply concerned about the lack of honest and open answers to some very simple, basic questions” from Shein about the supply chain in his letter to Hoggett.

He asked if LSEG was able to verify “statements by companies that want to be included in the list, with particular reference to their safeguards 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.