The Financial Conduct Authority (FCA) has been threatened with legal action by a human rights group if it approves the plans of Shein, a Chinese-founded online retailer, to float on the London Stock Exchange.
Shein, which is reportedly planning to float in the City later this year, has faced criticism from campaigners and lawmakers over its supply chain practices, as reported by .
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 alleged to be persecuting the Uyghur Muslim minority.
Stop Uyghur Genocide, which expressed its concerns over Shein’s supply chain to the FCA last June, has now warned the regulator of potential legal action if it allows the company’s flotation plans to proceed.
Lawyers for the campaign group stated in a letter to FCA executives 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".
This same group recently submitted a dossier of evidence alleging supply chain abuses to a Select Committee prior to an appearance by Shein’s senior lawyer earlier this month.
The dossier is reported to show "clear, identifiable links between cotton production in the Uyghur region and forced labour". The group also highlighted publicly available evidence which it claims connects Shein’s supply chains to cotton produced in the Uyghur region.
Shein's senior lawyer, Yinan Zhu, faced harsh criticism from MPs at the Select Committee, who accused the retailer of behaviour that "bordered on contempt" after she repeatedly declined to answer questions.
Today, it was revealed that the group has escalated its pressure on the FCA by issuing a pre-action protocol letter through law firm Leigh Day, detailing the High Court challenge it intends to launch if the FCA approves an IPO prospectus of Shein.
The Good Law Project has also entered the legal battle, offering financial assistance for legal costs to the campaign group. Ricardo Gama, a lawyer at Leigh Day, stated 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."
He added: "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 º£½ÇÊÓƵ. It would be surprising, and unlawful, if the FCA decided to take a less robust approach to allegations of forced labour."
The FCA has been contacted for comment.
