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Regulatory impasse

The SEC extended the time for briefings to be filed in the appeal of the Chinese affiliates of the Big Four firms against the January 2014 decision by an Admin-istrative Trial Judge to ban them for six months. The final brief is now due on May 29, 2015, meaning that a final decision is unlikely before late summer. 

Both the SEC and the Big Four indicate that substantial progress has been made towards a settlement, “however, the multi-party nature of the negotiations, the importance, complexity and sensitivity of the matters under discussion, and the legal and cross-border regulatory issues presented have continued to require significant time and care to discuss.” The negotiations, of course, are not be-tween the SEC and the Big Four, they are between the SEC and China, since the Big Four have no means to negotiate a settlement. It is all up to China to deter-mine the extent to which it is willing to cooperate with U.S. securities regulators on Chinese companies listed in the U.S.

In a closely related matter, U.S. Public Company Accounting Oversight Board (PCAOB) negotiations for regulatory access to China have been going on for a decade. PCAOB Chairman James Doty recently said that those negotiations were in a “difficult and frustrating place”. Shaswat Das, Associate Director of the PCAOB’s office of International Affairs and Alan Lo Re, Assistant Director Attorn-ey of the PCAOB’s Division of Enforcement and Investigations are scheduled to speak at a conference in Beijing on Thursday, and perhaps have meetings scheduled with Chinese regulators.  

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