April 1, 2013

SEC v. China: Tug-of-War Over Audit Files Continues

This WSJ article explains the latest in the ongoing case of the Big 4 being trapped between US regulators and the China state secrecy laws. Here’s an excerpt from the article:

An international tug of war over Chinese audit files has been dragged into a Hong Kong court this week. The outcome could be crucial for multinational companies with big China operations, and for Chinese companies listed overseas.

U.S. authorities have been battling for access to files prepared by audit firms when they work in China on companies listed overseas. The big, international audit firms say it is against Chinese law to hand over the files. Chinese and U.S. regulators are at a stalemate over the issue. Now, a similar problem is before a Hong Kong court that began hearing a dispute between Ernst & Young and the city’s Securities and Futures Commission on Wednesday.

In another case, as noted in this Accounting Age blog and related to what I have blogged about before, Deloitte is arguing that the SEC is trying to “leapfrog” over the Supreme Court’s Morrison decision by serving a subpoena on the US lawyer for Deloitte’s Shanghai affiliate in an attempt to obtain the work papers for a Chinese company. And see this WSJ article about a novel remedy out of Delaware, in which a judge gave a court-appointed official the power to seize company assets needed to buy back the investor’s shares for far more than their current price. I wonder how they will enforce the put option judgment if they cannot reach most of the assets…

Will Wall Street Ever Learn E-Mails Are Forever?

This Bloomberg article entitled “Will Wall Street Ever Learn E-Mails Are Forever?” brings to mind that lawyers need to learn this lesson too – given the NY Times front page article last week about emails traded about excessive billing (here’s the firm’s explanation of how it was an offensive attempt at humor). Here’s a NY Times op-ed against the billable hour framework (noting how someone billed 6000 hours annually over 4 consecutive years).

Meanwhile, this article explains how some law firms are touting their cybersecurity cred…

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– Broc Romanek