Hong Kong’s market regulator is taking Ernst & Young to court in an attempt to force it to disclose information on a former client in China in a test case for how far the mainland’s secrecy laws can shield disclosure of sensitive corporate matters in the territory.
The Securities and Futures Commission, which has co-operated with China’s securities regulator, is concerned that accountancy firms may be tempted to use China’s secrecy laws in Hong Kong to avoid upsetting former clients and to protect their reputation, a person close to the regulator said.
It is the first time the SFC has pursued an auditor through the courts in this way and comes against the backdrop of similar investigations of US-listed Chinese companies by the Securities and Exchange Commission.