Wall Street banks helped Chinese military-linked firm raise billions despite red flags, lawmakers find
FIRST ON FOX: Congressional investigators are accusing major U.S. banks of helping a Chinese battery giant the Pentagon labeled a "Chinese military company" raise billions of dollars from global investors despite unresolved national security concerns.
A new report from the House Select Committee on the Chinese Communist Party alleges JPMorgan Chase and Bank of America underwrote CATL’s Hong Kong IPO — helping the company raise money from investors through stock offerings — after the Pentagon designated the company under its Section 1260H list of Chinese military-linked firms in January 2025. The report also says JPMorgan, Bank of America and Morgan Stanley later participated in a second CATL offering.
The report places Wall Street at the center of a growing debate in Washington over whether American financial institutions should continue helping companies the Pentagon has identified as linked to China’s military or military-civil fusion strategy raise money from global investors, even when those activities remain legal under current U.S. law.
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The Pentagon’s Section 1260H list identifies companies the War Department determines are linked to China’s military or military-civil fusion strategy, though the designation itself does not broadly prohibit U.S. investment or commercial activity.
The committee argues the transactions exposed a major gap in U.S. policy because the designation carried reputational consequences but did not prohibit Wall Street firms from helping the company raise capital.
"To be clear, the banks broke no U.S. law and the transactions were not prohibited by U.S. law," the report states. "But each bank made the choice to essentially disregard the U.S. government’s Chinese military company designation to make millions of dollars."
"The banks trusted CATL’s representations over the considered judgment of the U.S. government," the report states.
The report alleges JPMorgan and Bank of America accepted CATL’s assertions that it had no links to China’s military despite the Pentagon’s conclusions and despite what the committee described as incomplete responses during due diligence reviews.
CATL allegedly provided identical responses to multiple JPMorgan questions concerning ties to the People’s Liberation Army, dual-use technologies and military-linked entities, according to documents cited in the report.
The committee also cited what it described as publicly available evidence linking CATL to Chinese military-industrial entities, including relationships with companies on U.S. restriction lists and research collaborations involving defense-linked institutions.
"My committee’s investigation calls for serious policy changes to ensure what JPMorgan and Bank of America did never happens again," said Select Committee Chairman John Moolenaar, R-Mich. "American banks must not help Chinese military companies raise money, because in doing so, they provide not only access to funding, but also legitimacy and credibility to companies that are helping our adversary build up its military."
JPMorgan and Bank of America defended their involvement, arguing CATL is not sanctioned by the U.S. government and remains deeply integrated into Western manufacturing supply chains.
"Based on available information and our own due diligence, CATL has lawfully partnered with American companies — including major auto manufacturers — to provide essential battery technology that will strengthen U.S. manufacturing and enhance American competitiveness," a JPMorgan spokesperson told Fox News Digital.
"We complied with the law and U.S. government sanctions policies," a Bank of America spokesperson told Fox News Digital. "We conducted the appropriate due diligence on this transaction, and we shared significant detail about our process with the committee. CATL is not sanctioned by the US government and conducts significant business with U.S. companies."
JPMorgan additionally argued the Pentagon designation applies primarily to War Department procurement and does not prohibit private-sector business relationships involving CATL.
CATL has other partnerships with major Western automakers including Ford, Tesla, Stellantis, BMW and Volkswagen.
JPMorgan CEO Jamie Dimon previously defended the bank’s work involving CATL in a Bloomberg Television interview in May 2025.
"If we thought it was wrong, we wouldn't do it," Dimon said. "The government did not sanction CATL."
The debate underscores growing tension between U.S. national security concerns surrounding China and the reality that major American and European manufacturers remain heavily reliant on Chinese battery technology and supply chains.
Ford is currently building a $3 billion battery plant in Michigan using CATL technology through a licensing arrangement designed to avoid Chinese ownership of the facility, according to a recent Bloomberg report. Ford has argued the partnership helps strengthen domestic manufacturing and improve U.S. competitiveness in electric vehicle production.
The committee’s report argues current U.S. law is insufficient to stop American financial institutions from financing companies tied to China’s military-industrial base because Section 1260H restrictions primarily affect War Department procurement rather than broader commercial activity.
"The deals were legal, so the banks proceeded," the report states.
The committee recommends legislation that would prohibit U.S. financial institutions from underwriting offerings for blacklisted Chinese entities and urges the Treasury Department to impose stronger sanctions authorities against CATL.
Fox News Digital has also reached out to Morgan Stanley, CATL and the Pentagon for comment.