Temperature Heats Up in PCAOB-China Talks

The Reverse Merger Wire reports that Public Company Accounting Oversight Board (PCAOB) Chair James Doty is growing a little impatient with Chinese securities regulators over the issue of inspections of Chinese accounting firms that are auditing US public companies.

There was an apparently positive meeting between the PCAOB and Chinese officials in July in Beijing. But the plan to have the Chinese visit the US has been put off, and Chinese officials have since met with representatives of the top worldwide accounting firms to warn them about releasing information to outside parties as a possible violation of Chinese secrecy laws.

If China chooses not to move on allowing the PCAOB to inspect these China-based firms, there is a real risk the Board will have no choice but to terminate their right to audit US public companies. One assumes this will not play well politically with the country we owe jillions of dollars to. But it appears that Doty is moving into a more icy vs. friendly direction here, not sure if that helps bring the Chinese officials along or hastens the eventual confrontation.

Buckle your seat belts on this one gang. Gonna be a little bumpy.

For additional insights on reverse mergers, SPACs, other alternatives to traditional initial public offerings, the small and microcap markets and the economy, visit the Reverse Merger and SPAC Blog  by David N. Feldman, Esq., Partner of Richardson & Patel LLP.

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