SEC puts Longtop under the cosh

SEC puts Longtop under the cosh

The Securities and Exchange Commission has charged Longtop Financial Technologies with failing to file accurate reports, paving the way for a ban on broker-dealers trading in the Chinese fintech vendor.

Longtop's shares were delisted from the New York Stock Exchange in August amid concerns over its accounting but the vendor can still be trader over the counter.

The SEC says it failed to file an annual report for its fiscal year ended on 31 March and that filings for the previous three years should not be relied upon after the company's own auditor cast doubt on them.

The auditor, Deloitte Touche Tohmatsu, quit in May prompted by uncertainty about the company's bank statements and sales revenue, the "deliberate interference" by members of management in the process and the "unlawful detention" of DTT's audit files.

In September the SEC asked a federal court to force DTT to hand over documents related to the possible fraud by Longtop.

Now the watchdog and Longtop will go to an administrative law judge who could suspend or revoke the registration of Longtop's securities, meaning no broker-dealer may execute any trades in them. 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.

Antonia Chion, associate director, division of enforcement, SEC, says: "We are taking this action to protect investors because it appears there is no current and reliable information available to the investing public about Longtop."

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