Regulator 'regrets' US move on audits

The China Securities Regulatory Commission "regrets" that its United States counterpart, the Securities and Exchange Commission, "ignored" China's efforts to promote cooperation in cross-border supervision, Deng Ge, a CSRC spokesman, said on Friday.

The CSRC will pay close attention to the progress of the ruling on the Chinese units of the "Big Four" accounting firms, the spokesman said.

Cameron Elliot, an administrative law judge with the SEC, recommended on Wednesday that the Chinese affiliates of Deloitte Touche Tohmatsu Ltd, Ernst & Young, KPMG and PricewaterhouseCoopers LLP be barred from providing audits for US-traded companies for six months.

Those affiliates had rejected the US regulator's demand for access to audit documents.

"We regret that the ruling ignored China's efforts to strengthen cooperation with the US on cross-border supervision," said Deng.

The CSRC had shared the audit details of four Chinese companies listed abroad with overseas regulators, in a further move to crack down on illegal activities and protect the interests of investors, the CSRC said in early January.

In May, a memorandum of understanding was signed by the CSRC, China's Ministry of Finance, the audit regulator in the US and the US Public Company Accounting Oversight Board.

Elliot's ruling doesn't take effect immediately, as it must be approved by the SEC. The firms can also appeal, first to the commission itself, then to the US federal courts.

"We hope that the SEC would consider the overall situation of Sino-US cooperation on supervision and make a correct final judgment to deal with the case appropriately," said Deng.

Deng said the CSRC will closely monitor the progress of the ruling and negotiate with the SEC.

If the ruling stands, it could temporarily leave more than 100 Chinese companies that trade on US markets without an auditor.

It may also influence audits of US multinational companies that have large operations in China, because the Chinese affiliates of the "Big Four" often help their US affiliates complete those audits.

Third-board listings

There are now 621 companies on the market run by the National Equities Exchange and Quotations Co Ltd, as 266 new enterprises listed on Friday.

The so-called "third board" is a national equity exchange that serves "innovative, startups or growing micro-, small and medium-sized enterprises", an exchange statement said.

The newly listed companies are mostly small enterprises involved in advanced manufacturing, information technology, culture and biomedicine.

Deng said these listings won't drain funds from the A-share market.

"The companies on the third board are micro-, small and medium-sized ones and their financing amounts won't be large."

In 2013, 48 companies raised 776 million yuan ($128 million) on the board through share issues.

The State Council, China's cabinet, said in December that any micro-, small or medium-sized enterprise could list on the board.