TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
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Reuters
20 June 2012
The Chinese arms of all of the Big Four audit firms have been asked by U.S. regulators to turn over documents related to audits of China-based companies listed in the United States, a person familiar with the matter said on Tuesday.
The formal requests made by the U.S. Securities and Exchange Commission ratchet up the tension in a standoff between U.S. authorities, the companies and Chinese officials over access to the auditors’ work papers. Concerns are now growing that if no diplomatic solution is found, Chinese companies could be forced to de-list from American stock exchanges.
The SEC has already filed an enforcement action against Deloitte’s Shanghai arm seeking documents, but has not yet taken public enforcement action against the Chinese units of the other Big Four firms - Ernst & Young, PwC and KPMG - over Chinese audit papers.
Now that the other firms have received formal requests for documents, it could be a matter of time before they are in the same position as Deloitte, one legal expert said.
“If they don’t produce the documents upon request, then it’s possible that the SEC could take adverse action the way they already have done in the case of Deloitte Shanghai,” said William Currier, a partner with law firm White & Case in Washington.
On May 9, the SEC charged Deloitte’s Shanghai arm with violating U.S. securities laws by refusing to produce documents from an audit of an unnamed China-based company. The SEC said sanctions could include censure or revoking the firm’s ability to practice before the commission.
PwC confirmed on Tuesday that it has received requests for documents. It did not say when the SEC asked for documents but said “at various times” it has received formal and informal SEC requests for audit papers from China.
“Like other firms who have received similar requests, in dealing with them we are confronted by conflicting laws between the United States and China,” PwC said in a statement.
KPMG declined to comment on whether it has received requests for documents from the SEC. Ernst & Young did not immediately respond to a request for comment.
US Impatience
U.S. authorities are increasingly impatient with their Chinese counterparts about not being allowed to inspect auditors of U.S.-listed Chinese companies and a lack of co-operation in their investigations into alleged accountancy fraud.
On Tuesday, a board member of U.S. accountancy regulator the Public Company Accounting Oversight Board (PCAOB) signaled in a speech in Shanghai that U.S. authorities want a breakthrough to the impasse by the end of 2012.
“Both the PCAOB and the SEC have also requested the cooperation of Chinese authorities in obtaining documents in enforcement cases relating to China-based companies,” board member Lewis Ferguson said in a copy of the speech released to the media.
“I believe it is fair to say that how we proceed will depend in substantial part on whether we can make real progress toward a cooperative oversight agreement with regulators during the balance of this year.”
If no agreement is reached, then the firms and other Chinese auditors could be barred from vetting the accounts of U.S.-listed companies, in a move that could force them to de-list from American exchanges.
“Without resolution, the only meaningful option for the SEC, and the PCAOB, is for the PCAOB to de-register the firms and for the SEC to ban them from practice before the SEC,” wrote Paul Gillis on the China Accounting Blog.
“Having an auditor is a listing requirement of the exchanges, so under exchange rules the companies face de-listing,” he said.
Deloitte’s Shanghai arm has been the target of previous SEC action over work papers. Last September, the agency sought a court order to force the auditor to produce records from its audit of China-based Longtop Financial Technologies . Deloitte has said Chinese law prohibits it from turning over the documents.
That case is pending in a U.S. District Court. Deloitte has asked the court to quash the SEC action, saying the SEC’s real dispute is with Chinese regulators and should be resolved through diplomatic negotiations.
The SEC’s press for work papers is part of a wide-ranging effort by U.S. regulators to crack down on accounting problems at Chinese companies listing shares in the United States.
U.S. investors have lost billions of dollars in China-based companies after questions were raised about the companies’ accounting, prompting a broad probe by the SEC.
Last month, the PCAOB said it has made some progress in talks with China, reaching an agreement to observe audit inspections there. That would be a first step toward a deal allowing PCAOB inspectors in China to do joint inspections, PCAOB Chairman James Doty said.