US regulators yesterday charged the Chinese arms of five top accounting firms with securities violations over their refusal to produce certain audit papers for US-listed Chinese companies.
The Securities and Exchange Commission began proceedings against the Chinese affiliates of Deloitte, KPMG, BDO, Ernst & Young and PricewaterhouseCoopers . It was the SEC’s widest enforcement effort yet to procure documents in connection with probes of possible accounting fraud of US-listed Chinese companies, and raised questions about whether talks have stalled between the US and Chinese governments to resolve the issue.
The SEC said it has been seeking documents related to investigations of possible wrongdoing at nine China-based companies. Chinese secrecy laws have stymied efforts to obtain audit documents that investigators need to determine whether there were accounting irregularities.
An administrative law judge will schedule a hearing to determine potential sanctions against the Chinese arms of the accounting firms, the SEC said.