SEC Charges Chinese Units of Top Accounting Firms

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The United States Securities and Exchange Commission is charging the Chinese units of five top audit firms with regulatory violations. It follows major losses for US traders who have bought shares in listed Chinese companies that were later found to have accounting inconsistencies.

The SEC on Monday named Deloitte, KPMG, PricewaterhouseCoopers, Ernst and Young and BDO in its latest attempt to investigate the firms' Chinese branches.

The accounting firms have resisted the SEC's demands to provide accounting documents produced by their Chinese units, saying it would violate Chinese law.

The SEC wants those documents to determine whether any fraud has been committed in the listing of Chinese firms in the US market. Accounting irregularities have inflated listing prices, and US shareholders have been left billions of dollars out of pocket when those companies later become defunct.

Earlier this year, US and Chinese regulators say they would try to cooperate on document access issues. Monday's law suit indicates though those efforts have made little ground.

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