US states ask SEC to verify Sheen’s compliance with forced labor laws

The Republican attorneys general of 16 US states have asked the Securities and Exchange Commission to review the supply chain of China-based fast-fashion retailer Sheen for the use of forced labor ahead of its potential IPO.

Amid growing friction between Washington and Beijing, last week’s letter to the SEC increased pressure on Schein as China hawks in Congress crack down on Chinese companies that don’t align with US foreign policy goals.

Shein, which sells $7 clothing and $5 home goods in more than 150 countries, has moved its headquarters to Singapore but manufactures most of its products in China.

The letter urges the SEC to ensure that Sheen and other foreign companies listed on U.S. stock exchanges conduct independent audits to ensure compliance with U.S. laws prohibiting imports made using forced labor.

Sheen said he is not planning an IPO this year and will not tolerate forced labor. Schein was not immediately available for comment on the letter or his plans for the IPO.

Reuters reported in July that Sheen was working with at least three investment banks on a potential US IPO and had held talks with the New York Stock Exchange and Nasdaq, according to people familiar with the matter.

Shane was able to expand rapidly in the United States despite concerns about its labor practices and sustainability. Sheen opened a warehouse in Indiana in 2022 to speed up deliveries and meet growing demand in the United States. It expanded by 302,000 square feet, or 20%, this month to nearly 1.8 million square feet, according to a source familiar with the matter.

Indiana Attorney General Todd Rogita, a Republican, did not sign the letter.

In May, two dozen U.S. officials sent a similar letter to the SEC, asking Sheen’s potential IPO to be put on hold until it can confirm the company does not use forced labor. (Reporting by Ariana McLemore in New York City; Editing by Cynthia Osterman)