The US Securities and Exchange Commission (SEC) has warned that criminal charges could be brought on top of civil proceedings against Chinese companies with accounting irregularities that are listed on US stock markets.
The US Justice Department is believed to be investigating accounting irregularities at Chinese companies, says Reuters. This could involve the high profile Longtop Financial Technologies case in which audit firm Deloitte China has been blocked by Chinese authorities from providing documentation to the SEC.
Officials from the SEC and the Public Company Accounting Oversight Board are set to meet with their Chinese authorities in Washington in October to discuss joint inspections of Chinese audit firms.
Until an agreement has been reached between authorities in both countries, it is difficult to see firms in China obliging with the SEC or the Justice Department in their investigations.