October 7, 2011 / 11:02 PM / 8 years ago

U.S. judge puts brakes on SEC's Deloitte case

* Questions why SEC doesn’t go through Hague

* Asks SEC to file additional briefs next week

* Lawyers for Deloitte have not yet appeared in case

By Aruna Viswanatha

WASHINGTON Oct 7 (Reuters)- A federal judge on Friday put the brakes on the U.S. government’s attempt to quickly get documents related to possible accounting fraud at Chinese companies listed on U.S. stock exchanges.

U.S. Magistrate Judge Deborah Robinson questioned whether she could force a Chinese unit of accounting firm Deloitte & Touche to hand over records to the U.S. Securities and Exchange Commission.

In September the SEC asked the court to enforce a subpoena it sent to Deloitte seeking information about its Chinese unit’s audits of Longtop Financial Technologies Ltd LGFTY.PK, a Chinese company under investigation by the SEC.

Dozens of China-based companies have disclosed auditor resignations and booking-keeping irregularities in the past year, prompting a broad SEC and Justice Department review.

But the probes have stalled as investigators face difficulties in obtaining documents and evidence from auditors in China.

On Friday, Robinson asked why the agency was not going through procedures set up by the Hague Convention to access that information and is instead going through U.S. courts.

That route would mean a long delay, SEC lawyer Mark Lanpher said in court. “We’re talking about months and months,” he said. “Time is of the essence.”

Lawyers for Deloitte have not formally acknowledged to the court that they are representing Deloitte or have the motion, since Deloitte is not technically a defendant, a status that slows the process further.

Robinson ordered the SEC to submit by next Friday a brief outlining precedent for the court to force Deloitte to respond, and to show the SEC doesn’t have to go through the Hague first. (Reporting by Aruna Viswanatha; editing by Carol Bishopric)

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