Deloitte and SEC to battle it out in court over Chinese audit
Deloitte requests judge throw out SEC case to force it to reveal documents of audit of Chinese IT company
DELOITTE HAS requested a federal judge reject a US Securities and Exchange Commission case to force it to hand over documents from its audit of fraudulent Chinese IT business Longtop Financial Technologies.
Deloitte argues it is barred from handing over the documents by Chinese secrecy laws, Reuters.com reports.
The case, which began in May 2011, has reopened after it was temporarily suspended when discussions between the US regulator and the Chinese Securities Regulatory Commission, which lasted six months, broke down.
The SEC said that the CSRC “remains unwilling or unable to provide the SEC with meaningful assistance in its enforcement investigations” when it requested the case be reopened.
Deloitte argues the SEC’s issue is partly of the regulator’s own making as it knew of the secrecy laws before it allowed Chinese businesses to list on the US stock exchange.
“The SEC has long been aware that the CSRC forbids China-based audit firms to produce audit work papers directly to the SEC, and yet the SEC chose to allow China-based companies to sell securities in the United States despite those restrictions,” the firm said in the papers.
Longtop was delisted from the New York Stock Exchange in 2011 for failing to meet listing standards after an SEC investigation for alleged accounting irregularities.
