SEC Says Big Four Audit China-Affiliates Blocked Probe

[Parsad]

SEC going after big four China affiliates.  Cheers!

 

http://www.bloomberg.com/news/2012-12-03/sec-says-big-four-audit-china-affiliates-blocked-probe.html

[meiroy]

 

http://www.sec.gov/news/press/2012/2012-249.htm

 

"SEC Charges China Affiliates of Big Four Accounting Firms with Violating U.S. Securities Laws in Refusing to Produce Documents

 

FOR IMMEDIATE RELEASE

2012-249

 

Washington, D.C., Dec. 3, 2012 — The Securities and Exchange Commission today began administrative proceedings against the China affiliates of each of the Big Four accounting firms and another large U.S. accounting firm for refusing to produce audit work papers and other documents related to China-based companies under investigation by the SEC for potential accounting fraud against U.S. investors.

 

The SEC charged the following firms with violating the Securities Exchange Act and the Sarbanes-Oxley Act, which requires foreign public accounting firms to provide the SEC upon request with audit work papers involving any company trading on U.S. markets:

 

BDO China Dahua Co. Ltd

Deloitte Touche Tohmatsu Certified Public Accountants Ltd

Ernst & Young Hua Ming LLP

KPMG Huazhen (Special General Partnership)

PricewaterhouseCoopers Zhong Tian CPAs Limited"

 

 

This means a likely delisting of Chinese companies.

 

[oddballstocks]

Ouch! So there goes the reasoning that since a Chinese firm is audited by a branch of a Big-Four they're squeaky clean.

[ItsAValueTrap]

Finally... haha.

 

This is one of the reasons why I will never go long any Chinese reverse merger stock:

http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/in-china-silvercorp-critic-caught-in-campaign-by-police/article4528671/?page=all

 

Like Francis Chou I bought QXM/XING... unfortunately the insiders just ran off with all the money.  :(

[jasonfx]

Some audit firms have a lot better track record than others.  A Chinese RTO that I am looking at in particular uses a well-known firm that handles many Chinese clients but (as far as I can tell) still maintains a clean record.  I wonder if at this point we have enough information to better trust the financials of companies whose auditors have a good track record -- or if this is just wishful thinking.