The U.S. Securities and Exchange Commission, in soliciting public comment Wednesday on its definition of a foreign private issuer, singled out Chinese companies incorporated in the Cayman Islands as benefiting from reporting exemptions despite being traded solely in American markets.

But as it considers new rules on foreign companies' disclosure requirements, the SEC risks placing onerous requirements on overseas businesses operating in good faith and already subject to strong securities oversight in their home countries, securities lawyers said Friday.

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