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SEC Escalates Battle With D&T Shanghai Over Documents, Brings 102(e) Charges

Bruce Carton | May 10, 2012

On May 9, the SEC brought an administrative proceeding under Rule 102(e) of the Commission's Rules of Practice against against Shanghai-based Deloitte Touche Tohmatsu CPA Ltd. over the firm's refusal to produce audit work papers related to one of its clients. The case represents the first time the SEC has ever brought an enforcement action against a foreign audit firm for failing to comply with a request by the agency under Section 106 of the Sarbanes-Oxley Act. “Foreign firms auditing U.S. issuers should not be permitted to shield themselves from regulatory scrutiny to the detriment of U.S. investors,” said Robert Khuzami, Director of the SEC's Division of Enforcement.

The SEC alleges that D&T Shanghai will not produce the relevant audit work papers "because of its interpretation that it is...

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