UPDATE 1-China securities regulator "regrets" U.S. ruling in audit case

Fri Jan 24, 2014 4:57am EST

BEIJING Jan 24 (Reuters) - China's securities regulator chided its U.S. counterpart on Friday over the latest ruling in a long-running and thorny dispute over access to documents that has snagged the world's top four accounting firms.

At a regular news briefing, China Securities Regulatory Commission (CSRC) spokesman Deng Ge expressed "deep regret" over a ruling that the Chinese units of the four companies should be suspended from auditing U.S.-listed companies for six months.

"The SEC would bear all the responsibility for the consequences of its action," Deng said.

In a ruling earlier this week, SEC Administrative Law Judge Cameron Elliot censured the Chinese affiliates of KPMG , Deloitte & Touche, PricewaterhouseCoopers and Ernst and Young, for failing to give U.S. regulators audit documents of certain Chinese companies under investigation for accounting fraud.

The SEC for years has been trying to get its hands on the documents, saying it needs them for investigations into a rash of accounting scandals that have plagued many Chinese companies listed in the United States.

The firms have said that handing over the documents could lay them open to criminal prosecution in China for breaching that country's secrecy laws.

U.S. officials have tried to address the dispute both through diplomatic channels and by threatening the firms with enforcement action.

The four companies have said they will appeal the ruling, and they have the backing of the U.S. Chamber of Commerce, which said on Thursday it plans to lobby U.S. officials to reach a diplomatic deal with China.

The judge's ruling is not expected to be disruptive to U.S.-listed Chinese companies relying on these firms to review their 2013 books as it will not go into immediate effect. The appeal process may last years.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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