The US Securities and Exchange Commission (SEC) has charged
Deloitte’s Chinese member firm with ‘wilfully’ violating the
Sarbanes-Oxley Act and the Securities Exchange Act of 1934 by
failing to provide audit work papers.
The SEC launched administrative action against the firm after
several unsuccessful attempts to obtain documents related to the
audit of Longtop Financial Services.
The case is to be heard in front of a US
federal government administrative judge, an independent judicial
officers who in most cases conduct hearings and rule on allegations
of securities law violations initiated by the SEC.
Deloitte China is prevented by Chinese law
from handing over the paperwork of a Chinese company to a foreign
regulator.
If the SEC’s case is successful in front of an administrative
judge, Deloitte China might face a fine or be bared from practicing
under SEC’s jurisdiction.
The SEC said it has been making extensive efforts for more than two
years to obtain documents related to the firm’s work for the
company, which issues US securities registered with the SEC.
“Foreign firms auditing US issuers should not be permitted to
shield themselves from regulatory scrutiny to the detriment of US
investors,” SEC’s division of enforcement director Robert Khuzami
said.
