Badly needed LSE listing threatened

Stop Uyghur Genocide (SUG) is threatening to challenge the Financial Conduct Authority (FCA) in court if Shein’s application to list on the London Stock Exchange is approved, citing concerns over forced labour in its supply chain.

Stop Uyghur Genocide (SUG) has stepped up its fight against Shein’s application to list on the London Stock Exchange with a threat to issue a High Court challenge to the Financial Conduct Authority (FCA). Buoyed by robust questioning of a Shein in-house lawyer at the Business and Trade Select Committee on 7 January, and now strengthened by support from the Good Law Project, SUG has given the FCA a 14-day deadline to respond to its sixth legal letter in seven months, which also signals the start of the judicial review process.

The pre-action protocol letter from SUG’s legal team at law firm Leigh Day outlines the High Court challenge that SUG plans to issue if the FCA approves an IPO prospectus of Shein and/or admits securities issued by Shein to the official list, a Chinese-founded, now Singapore-headquartered, online fashion retailer. The letter follows the appearance by Shein lawyer Yinan Zhu at the Parliamentary select committee, before which she was presented by SUG with a dossier of evidence alleging abuses in the company’s cotton supply chain.

Last summer, SUG, headed by Uyghur human rights campaigner Rahima Mahmut, sent the same dossier to the FCA. It contains information which it says reveals there is a high likelihood of forced labour in the online fashion seller’s supply chain, which it claims should bar the company from listing on the London Stock Exchange. SUG argues that the use of forced labour in supply chains would be unlawful under the Modern Slavery Act and would mean that Shein would have to explain company profits in light of proceeds of crime laws.

The charity says the FCA should block any application by Shein for listing on the LSE, given there is good reason to believe the company’s supply chains are affected by modern slavery, potentially resulting in proceeds of crime offences. The FCA has so far said that it is legally barred from confirming whether Shein has made an application to it. The United States Securities and Exchange Commission had already refused to recommend the listing of Shein for trading in the US because of concerns around labour practices in Shein’s supply chains.

SUG says its dossier shows clear, identifiable links between cotton production in the Uyghur region (XUAR) and forced labour and points to publicly available evidence which they say links Shein’s supply chains to cotton produced in XUAR. In the legal letter, Leigh Day quotes the concluding comments of the Chair of the Business and Trade Select Committee, Liam Byrne MP, who told Ms Zhu: “The Committee has been pretty horrified by the lack of evidence that you have provided today. You have given us almost zero confidence in the integrity of your supply chains. You cannot even tell us what your products are made from and you cannot tell us much about the conditions that workers have to work in. The reluctance to answer basic questions has, frankly, bordered on contempt of the Committee.”

SUG says Shein’s inability to answer simple questions about its supply chain undermines the reliability of Shein’s published UK Modern Slavery Statement and raises a real risk that Shein’s cotton products, the profits made from the sale of those products, and any securities issued by Shein are the proceeds of crime for the purposes of the Proceeds of Crime Act 2002. Allowing Shein to list on the LSE would undermine the FCA’s integrity objective, says SUG.

If the FCA decides to approve Shein’s IPO prospectus or admits Shein’s securities to the official list, SUG’s judicial review claim would allege a violation of the legal obligations in place to ensure the FCA meets its integrity objective. Rahima Mahmut, Executive Director of Stop Uyghur Genocide, said: “The decision to challenge Shein's stock exchange listing is a crucial step toward accountability. For the Uyghur people, who are subjected to forced labor as part of China’s oppressive regime, this sends a powerful message that profits cannot come at the cost of human dignity and freedom. Companies must not be allowed to thrive on exploitation and systematic abuse. This legal challenge is not just about Shein—it’s about standing up for justice and ensuring Uyghur voices are heard.”

GLP has added its support to SUG’s legal fight and will help the campaign group to meet legal costs. Good Law Project chair Jolyon Maugham said: “All regulators are facing huge political pressure from the Labour government. Here the FCA is being asked to swallow the appalling wastefulness of Shein's practices, its opaque ownership structure, and what looks very much like its links to the exploitation of the Uyghur people. The Labour government is doing this because in a world where it stubbornly refuses to contemplate joining the single market, prostituting global Britain's good name is the only way to pay the bills.”

Leigh Day solicitor Ricardo Gama, who represents Stop Uyghur Genocide, said: “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. That includes where the company produces goods using forced labour. 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.”