1. SEC Files Subpoena Enforcement Action Against Deloitte & Touche in Shanghai
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SEC Files Subpoena Enforcement Action Against Deloitte
& Touche in Shanghai
FOR IMMEDIATE RELEASE
2011-180
Washington, D.C., Sept. 8, 2011 – The Securities and Exchange Commission
today filed a subpoena enforcement action against Deloitte Touche
Tohmatsu CPA Ltd. for failing to produce documents related to the SEC’s
investigation into possible fraud by the Shanghai-based public accounting
firm’s longtime client Longtop Financial Technologies Limited.
Additional Materials
SEC court filing
Application
According to the SEC’s application and supporting papers filed in U.S.
District Court for the District of Columbia, the SEC issued a subpoena on
May 27, 2011, and D&T Shanghai was required to produce documents by
July 8, 2011. Although D&T Shanghai is in possession of vast amounts of
documents responsive to the subpoena, it has not produced any documents
to the SEC to date. As a result, the Commission is unable to gain access to
information that is critical to an investigation that has been authorized for
the protection of public investors.
“Compliance with an SEC subpoena is not an option, it is a legal obligation,”
said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The
ability of the SEC to conduct swift and thorough investigations requires that
subpoena recipients promptly comply with that legal obligation. Subpoena
recipients who refuse to comply should expect serious legal consequences.”
According to the court papers, D&T Shanghai was Longtop’s auditor since at
least 2007, and the firm consented that its audit reports for Longtop could
be filed annually with the SEC while knowing full well that they would be
relied upon by U.S. investors. On May 22, D&T Shanghai resigned as
Longtop’s auditor after discovering numerous improprieties during an audit
for the year ended March 31, 2011. In its resignation letter, which was
included in a Form 6-K furnished by Longtop on May 23, D&T Shanghai
identified numerous indicia of financial fraud at Longtop and indicated that
D&T Shanghai’s prior year audit reports for Longtop could no longer be
relied upon by investors.
As part of the Longtop investigation, the SEC staff issued and served the
subpoena on D&T Shanghai seeking production of documents related to the
incomplete audit of Longtop for the year ended March 31 as well as prior
year audits that D&T Shanghai completed. According to the court papers,
these documents may reveal information about D&T Shanghai’s discovery of
false financial records at Longtop, how any fraud schemes at Longtop were
able to continue undetected, and basic information necessary to ferret out
whether there was a fraud, who was behind it, how significant it was, and
how it was conducted.
http://www.sec.gov/news/press/2011/2011-180.htm[28-12-2011 20:00:30]

2. SEC Files Subpoena Enforcement Action Against Deloitte & Touche in Shanghai
The SEC’s court papers note that Longtop is a foreign private issuer whose
American depositary shares (ADSs) traded on the NYSE from the date of its
initial public offering in October 2007 until May 17, 2011, when the NYSE
halted trading prior to delisting Longtop’s securities in August 2011. When
trading was halted, Longtop’s ADSs were priced at $18.93 per share with 57
million shares outstanding, resulting in a market capitalization of
approximately $1.08 billion.
Pursuant to its application filed in court, the SEC is seeking a court order
directing D&T Shanghai to show cause why the court should not enter an
order requiring D&T Shanghai to produce documents responsive to the
subpoena.
# # #
For more information about this enforcement action, contact:
Lisa Deitch
Assistant Director, SEC Division of Enforcement
202-551-4999
http://www.sec.gov/news/press/2011/2011-180.htm
Home | Previous Page Modified: 09/09/2011
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