Judge Suspends Chinese Units of Big Four Auditors [WSJ, Judge's Decision]
The decision sounds like a pretty interesting read, so make a run at it if you can. "Judge [Cameron] Elliot's ruling Wednesday doesn't take effect immediately, and the firms can appeal the ruling, first to the commission itself, then to the federal courts. But if the ruling stands, it could temporarily leave more than 100 Chinese companies that trade on U.S. markets without an auditor. It also could throw a monkey wrench into the audits of U.S. multinational companies that have significant operations in China, because the Chinese affiliates of the Big Four—PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young—often help their U.S. sister firms complete those audits."
The US has just slammed the door on Chinese IPOs [Quartz]
Sorry, investment bankers. "Investment bankers and Chinese executives were hopeful that 2014 might be the year that Chinese IPOs return to the US. But a judge’s decision to ban the China units of the 'Big Four' accounting firms from working on US IPOs could quash those dreams—along with billions of dollars of funds that Chinese corporations hoped to raise from US investors."
SEC bans China Big Four [China Accounting Blog]
Our pal Prof. Paul Gillis is getting his name in the paper a lot for this story but he took the time to write his own blog post saying that Judge Cameron "threw the book" and "took off the hide" of the Big 4 Chinese affiliates. As for the companies who need audits, it doesn't sound like there are a lot of good options: " If the firms are suspended, they cannot issue audit reports, so the clients cannot file Form 20-F. Under exchange rules, this should lead to the companies being suspended from trading since investors do not have the data they need to be able to trade. Any company planning to do an IPO using a Big Four firm as auditor is out of luck if the auditors are suspended. Companies could switch to non-Big Four firms and avoid any consequences. There are almost 50 Chinese CPA firms registered with the PCAOB, but few, if any, have the scale and skills to audit the Big Four’s clients."
Then there's this tweet.
Reading SEC opinion banning China Big Four. Judge objects to firm's gall in some of their arguments. He seems most upset with KPMG
— Paul Gillis (@ProfGillis) January 23, 2014
Elsewhere in the Twitterverse, it appears Deloitte CEO Barry Salzberg can get things done in cramped quarters.
— Life at Deloitte (@lifeatdeloitte) January 23, 2014
Attorney: KPMG settles with client over illegal tax shelters [AJC]
The gift that keeps on giving: "Columbus attorney James Butler Jr. said his client, Christopher Cohan, former owner of a cable TV company and the NBA’s Golden State Warriors, 'is very pleased with the settlement,' although he would not disclose a figure. KPMG’s Atlanta office could not be reached for comment. The audit, accounting and tax advisory firm had denied its tax shelter strategies cost Cohan millions and said the strategies prevented additional fines and penalties."
Yellen prefers gender-neutral title of Fed 'chair' [The Hill]
Arrests Made in Cold Case Investigation, Including ’78 Lufthansa Heist [NYT]
Congrats on finally watching Goodfellas, guys.