| June 2
June 2 The Chinese units of the "Big Four"
accounting firms are trying to reach a settlement with U.S.
securities regulators to resolve a long-running dispute over
regulators' access to audit documents, according to a regulatory
filing released on Monday.
News of the settlement talks comes just a few months after a
Securities and Exchange Commission Administrative Law Judge
handed down a harsh 112-page ruling that chastised the firms for
failing to share audit work that SEC investigators believe could
help them uncover accounting fraud.
The judge in January had ordered the China units of the Big
Four firms - KPMG, Deloitte,
PricewaterhouseCoopers, Ernst and Young - to
be suspended for six months from auditing U.S. listed companies.
He also censured Dahua, which was previously a member of the
BDO International network, but did not recommend a suspension.
The Big Four's six-month suspension has been on hold since
the January ruling because the firms opted to appeal the
decision before the full five-member SEC commission.
Monday's filing, which was posted on the SEC's website,
marks the first time that regulators have publicly revealed they
are involved in ongoing settlements talks with the firms.
For years, auditors in China have declined to hand over
copies of their work papers to U.S. regulators amid fears they
would violate Chinese secrecy laws.
They have urged the U.S. and China to work out their
differences through diplomatic channels.
The judge's decision marked a big victory for the SEC, which
has brought numerous enforcement actions in recent years against
Chinese companies listed on U.S. stock exchanges amid a rash of
But it raised the stakes for the four accounting firms. If
they cannot hash out a more favorable deal with the SEC, then it
could make it exceedingly difficult for many companies in China
to find a new auditor during the suspension period.
Monday's filing was released in connection with a mutual
request by the SEC and the firms for a 90-day extension to file
legal briefs for the pending appeal.
In it, the SEC revealed that it has been in settlement talks
with the Big Four firms but that the talks "to date have not
However, the filing notes that "the resolution of some or
all of the proceedings" with the Big Four "could affect
remedies" that would be addressed in the Dahua-related matter.
(Reporting by Sarah N. Lynch; Editing by Ken Wills)