The Securities and Exchange Commission’s (SEC) attempt to force
Deloitte’s Chinese firm to pass over audit documentation on Longtop
Financial Technologies has hit a snag in a federal court, according
to Reuters.
US federal judge Deborah Robinson questioned
whether she could ask a Chinese firm to hand over documents to a US
authority. The SEC is investigating alleged accounting
irregularities at Longtop, a China-based company that is listed on
a US stock exchange.
Judge Robinson asked why the securities
regulator is going through US courts to access the information
rather than international procedures set up by the Hague
Convention.
SEC lawyer Mark Lanpher told the US District
Court for the District of Columbia that applying for information
through the Hague Convention would slow the process down by many
months and “time is of the essence”.
Robinson ordered the SEC to file a brief that
outlines precedent for the court to force Deloitte to respond and
shows why the SEC doesn’t have to go through the Hague.
In September, the SEC asked a US federal court
to force the Chinese affiliate of Deloitte, D&T Shanghai, to
disclose documents relating to Longtop after the firm failed to
respond to a US District Court of Columbia subpoena that set an 8
July deadline.
Deloitte at the time said that Chinese
authorities are preventing it from complying with an SEC
investigation.
In the past year, dozens of Chinese companies
listed in the US disclosed auditor resignations and accounting
irregularities, which has led to the SEC and Justice Department
investigation.
