US REGULATOR the SEC has been pulled up short over its subpoena of Deloitte’s China arm, after a judge ruled the move might contravene normal procedure.
Federal judge Deborah Robinson questioned whether the courts had the power to force Deloitte China’s hand, asking the SEC why it had not followed Hague Convention procedures, Reuters reports.
The SEC has demanded documents and evidence relating to the audit of Longtop Financial Technologies, a China-based US-listed company that is one of more than 30 recently accoused of questionable accounting activity.
Last week, China Biotics became the latest to fall foul of the regulator, which suspended trading in its shares due to “a lack of current and accurate information concerning the company’s securities because it has been delinquent in its required periodic reports since February 2011”.
Judge Robinson has given the SEC until Friday to show precedent for why it should be allowed to dodge Hague protocol, after a lawyer for the regulator complained about the delay this would cause: “We’re talking about months and months,” he said. “Time is of the essence.”
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