China Stocks Routed; SEC Accuses China Auditors of Withholding Documents
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China internet stocks declined early on Thursday, a day after the SEC accused China-based auditors of withholding documents. Affiliates of the four largest accounting firms were barred for six months from leading audits of U.S. listed companies after failing to comply with SEC orders.
From the SEC:
"This Initial Decision finds the Respondents should be sanctioned pursuant to Securities and Exchange Commission (Commission or SEC) Rule of Practice (Rule) 102(e)(1)(iii) for willfully violating the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), Section 106 (Sarbanes Oxley 106), as amended by Section 929J of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), and codified at 15 U.S.C. ยง 7216, and the Securities Exchange Act of 1934 (Exchange Act).
This Initial Decision censures and denies the privilege of practicing or appearing before the Commission for a period of six months to Respondents Ernst & Young Hua Ming LLP (E&Y), KPMG Huazhen (Special General Partnership) (KPMG), Deloitte Touche Tohmatsu Certified Public Accountants Ltd. (DTTC), and PricewaterhouseCoopers Zhong Tian CP As Limited (PwC), and censures Respondent BDO China Dahua CPA Co., Ltd. (Dahua)."
Affected stocks include: NQ Mobile (NYSE: NQ), Qihoo 360 Technology Co. Ltd. (NYSE: QIHU), Dangdang Inc. (NYSE: DANG), SINA Corporation (Nasdaq: SINA), Ctrip.com International Ltd. (Nasdaq: CTRP), Baidu, Inc. (Nasdaq: BIDU), and Youku Tudou Inc. (NYSE: YOKU), Sohu.com Inc. (NASDAQ: SOHU), Renren Inc. (NYSE: RENN).
In a statement to Bloomberg, Brean Capital's head of trading Roberto Frielander said he expects "extreme pressure" on the group. He cited a more than 20% decline after a similar ruling in December of 2012.
From the SEC:
"This Initial Decision finds the Respondents should be sanctioned pursuant to Securities and Exchange Commission (Commission or SEC) Rule of Practice (Rule) 102(e)(1)(iii) for willfully violating the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), Section 106 (Sarbanes Oxley 106), as amended by Section 929J of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), and codified at 15 U.S.C. ยง 7216, and the Securities Exchange Act of 1934 (Exchange Act).
This Initial Decision censures and denies the privilege of practicing or appearing before the Commission for a period of six months to Respondents Ernst & Young Hua Ming LLP (E&Y), KPMG Huazhen (Special General Partnership) (KPMG), Deloitte Touche Tohmatsu Certified Public Accountants Ltd. (DTTC), and PricewaterhouseCoopers Zhong Tian CP As Limited (PwC), and censures Respondent BDO China Dahua CPA Co., Ltd. (Dahua)."
Affected stocks include: NQ Mobile (NYSE: NQ), Qihoo 360 Technology Co. Ltd. (NYSE: QIHU), Dangdang Inc. (NYSE: DANG), SINA Corporation (Nasdaq: SINA), Ctrip.com International Ltd. (Nasdaq: CTRP), Baidu, Inc. (Nasdaq: BIDU), and Youku Tudou Inc. (NYSE: YOKU), Sohu.com Inc. (NASDAQ: SOHU), Renren Inc. (NYSE: RENN).
In a statement to Bloomberg, Brean Capital's head of trading Roberto Frielander said he expects "extreme pressure" on the group. He cited a more than 20% decline after a similar ruling in December of 2012.
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