US to drop legal action against Deloitte over China accounting
Securities and Exchange Commission drops subpoena action seeking records of Longtop Financial Technologies after the China Securities Regulatory Commission hands them over
The US Securities and Exchange Commission (SEC) moved on Monday to drop its action against multinational accountancy firm Deloitte Touche Tohmatsu for the records of a US-listed Chinese company after authorities in Beijing released them.
In a case that had placed it at odds with its Chinese counterpart, the China Securities Regulatory Commission (CRSC), the SEC had sought in 2011 to force Deloitte to turn over audit records for Longtop Financial Technologies, which it was investigating for possible fraud.
Deloitte’s China arm refused to do so, saying it was forbidden under China’s broad state secrets laws to disclose information about its clients.
But on Monday the SEC and Deloitte filed a joint motion with the US District Court in Washington to dismiss the subpoena action.
It said it had recently received “a substantial volume of documents called for by its subpoena,” including Deloitte China audit work papers and other documents related to Longtop.
“The production was made by the China Securities Regulatory Commission in response to the SEC’s request for assistance in August 2012. The CSRC produced the documents” after obtaining them from Deloitte China, it said.
The SEC had sought the information for its investigation into Longtop, a business software firm that was based in the southeastern city of Xiamen but registered in the Cayman Islands.