Cross-listed shares of Chinese firms on American stock markets spent Monday digging further into the red as fears mount of looming delisting by the U.S. Securities Exchange Commission (SEC).

The downward plunge began in earnest last week after the SEC issued a "provisional list of issuers" that were in potential violation of the Holding Foreign Companies Accountable Act; BeiGene (BGNE  ), Yum China Holdings (HUMC  ), Zai Labs (ZLAB  ), ACM Research (ACMR  ), and HUTCHMED (HCM  ).

The HFCAA amended a previous act to require foreign companies in the United States to disclose entanglements with a foreign government or face delisting from American exchanges. However, the Chinese government forbids examining domestic accounting information by foreign entities, creating an impasse that leaves many companies in crosshairs.

The decline in value of American Depository Receipts (ADRs) of companies such as Alibaba (BABA  ) and Nio (NIO  ) reflect the fears of investors that anyone could be next. The first five companies to be listed have recently made filings with the SEC and been found to have violated the act. As the year progresses, the list will more than likely grow.

Investors have some time before delisting occurs due to the time frame stipulated in the fine print of the HFCAA. However, with the act having been implemented last year and the SEC continually integrating it into its policies since, the deadline is only as far off as 2024. While Chinese regulators have been in talks with the SEC to resolve the impasse, little details are known on the progress of negotiations.

The way out for many companies has been to seek safe harbor with a dual listing in Hong Kong, which is much more investor-friendly than Beijing-controlled markets. While putting some steps between American investors and Chinese markets, the move will keep shares of cross-listed firms such as Baidu (BIDU  ) available to foreign investment.