US judge Orders Sanctions Against Big Four Auditors in China (Shearman & Sterling)

The Administrative Law Judge in the SEC’s long-running case against the Chinese affiliates of the Big Four auditors has issued an order barring the firms from practicing before the SEC for six months. The opinion can be viewed at

Not surprisingly, the auditors intend to appeal the decision – first to the Commission and then to the federal appeals court (if necessary) – and importantly, the bar will not take effect unless and until the Commission issues an order of finality.

It’s too early to tell whether this will have any impact on the US IPO pipeline for Chinese companies, especially since the bar is suspended during the appeal. But the decision may very well escalate tensions between the US regulators (the PCAOB and SEC) and the Chinese Securities Regulatory Commission, and could dial back some of the progress those regulators made in sharing information under MOUs signed last year. We will keep you updated on developments in this area.

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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