Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, November 10, 2011

SEC Charges China-Based Longtop for Deficient Filings

The SEC charged China-based Longtop Financial Technologies Limited with failing to file current and accurate financial reports with the SEC.  The SEC’s Division of Enforcement alleges that Longtop failed to comply with its reporting obligations because it failed to file an annual report for its fiscal year that ended March 31, 2011. Furthermore, Longtop’s independent auditor stated in May 2011 that its prior audit reports on Longtop’s financial statements contained in annual reports for 2008, 2009 and 2010 should no longer be relied upon.

If the administrative law judge overseeing the proceeding revokes the registration of Longtop’s securities, no broker-dealer may execute any trades in those securities. Revocation also would abolish Longtop as a public shell company so that it could not be sold and used as a vehicle for future fraud.

According to the order instituting the administrative proceeding, Longtop’s American depositary shares were listed and traded on the New York Stock Exchange under the symbol LFT beginning in October 2007 after an initial public offering. On Aug. 29, 2011, the NYSE delisted LFT, finding that the American depositary shares were no longer suitable for continued listing and trading. Currently, Longtop’s American depositary shares trade in the over-the-counter market under the ticker symbol “LGFTY.”

The SEC previously filed a subpoena enforcement action against Deloitte Touche Tohmatsu CPA Ltd. in Shanghai for failing to produce documents related to the SEC’s investigation into possible fraud by Longtop, the audit firm’s longtime client.

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