Treasury Secretary says China to hand audit work to SEC

Thu Jul 11, 2013 10:52pm EDT
 
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By Sarah N. Lynch and Anna Yukhananov

WASHINGTON (Reuters) - Chinese regulators will hand over some audit documents of U.S.-listed Chinese companies to U.S. securities regulators, U.S. Treasury Secretary Jack Lew said on Thursday, a move that may thaw a dispute over multiple accounting scandals.

Washington wants greater oversight after alleged misconduct at U.S.-listed firms based in China led to billions in losses, but investigations into possible fraud have been stymied as auditors have refused to turn over papers for fear of violating Chinese secrecy laws.

A U.S. Securities and Exchange Commission (SEC) official also testified in court on Thursday that documents relating to one company may arrive soon, according to a person in the court room.

But underscoring doubts over China's willingness to provide the documents, the official added that the China Securities Regulatory Commission (CSRC) has had a history of not following through on requests for assistance.

The SEC has been struggling for years to obtain audit work in China and many of the companies in question have seen their auditors resign. In some cases, the SEC and U.S. exchanges have delisted or deregistered the companies with accounting irregularities.

Lew's remarks came as high-level talks between the U.S. and China came to a close on Thursday.

"China's securities regulator announced that it will begin providing certain requested audit work papers to our market regulators, an important step towards resolving a long-standing impasse on enforcement cooperation related to companies that are listed in the United States," he told a news conference.

A spokesman for the CSRC also said this week that China was ready to provide the documents.[ID:nL4N0FG0QX]   Continued...

 
U.S. Secretary of Treasury Jacob Lew (C) and China's Vice Premier Wang Yang (L) sit before the start of a China Strategic and Economic Dialogue meeting at the U.S. Treasury Department in Washington, July 11, 2013. REUTERS/Larry Downing