WASHINGTON (AP) — Federal regulators have charged the Chinese affiliates of five of the biggest U.S. accounting firms with impeding the government's investigation of Chinese companies by refusing to turn over documents.
The Securities and Exchange Commission said Monday it has started proceedings against the Chinese affiliates of all so-called Big Four accounting firms — Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers — and a fifth major firm, BDO.
Hundreds of Chinese companies trade on U.S. stock exchanges. The SEC has been investigating many of them for possible accounting fraud. The agency says the accounting firms, which audit Chinese companies, have refused to cooperate in investigations of nine companies and to provide documents.
The Chinese affiliates of the firms, which are subject to Chinese law, say they cannot hand over the documents because the Chinese government won't allow them to do so, and could penalize them if they do. The Chinese government maintains that providing the documents to U.S. regulators would violate Chinese sovereignty and its secrecy laws.
In statements Monday, some of the Chinese affiliates said they hoped the issue could be resolved in negotiations between Chinese and U.S. authorities.
Ernst & Young Hua Ming LLP said "We hope that an agreement can be reached between U.S. and Chinese regulators that will enable our compliance with all applicable laws and regulations."
"While it is unfortunate that the two countries have not yet been able to find common ground on these issues, we remain hopeful that a diplomatic agreement can be reached," Deloitte Touche Tohmatsu said in its statement.