Longtop may face civil action from SEC

30 August 2011

The Securities and Exchange Commission (SEC) has issued a warning to Longtop Financial Technologies that it may face civil charges for breaking rules surrounding accounting procedures.

According to a filing to the SEC, the Chinese technology provider revealed it had received a notice from the regulator earlier in the month.

The Wells notice is a warning that staff are going to recommend that the organisation pursues charges against a company or body - the SEC then has to confirm the charges for a law suit to go-ahead.

In the filing, which was quoted by the Financial Times, the firm’s statements from the last three years “are now considered unaudited and the company does not have any reports with current reliable financial information available to the investing public. Therefore Longtop is delinquent in its reporting obligations under securities laws”.

The SEC is also expected to consider whether to suspend or revoke Longtop’s securities licence.

Trading in Longtop’s shares was stopped by the SEC in May after auditor Deloitte Touche resigned - it is thought that the latter took the step after it claimed it had found irregularities connected to Longtop’s accounts.

By Jim Ottewill

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