An accounting consultation firm has lost a lawsuit against the China Securities Regulatory Commission -- China's stock market watchdog --after it had alleged the agency overstepped its authority.
The Huawei Accounting Consultation Company, based in Henan Province, had filed a lawsuit earlier this year against the commission claiming it had abused its power by fining the company 300,000 yuan (US$36,100) for failing to detect false financial information in a listed company's books.
The first hearing of the case was held at the Beijing No 1 Intermediate People's Court on August 4.
The company appealed the verdict to the court, but the motion was rejected yesterday.
The commission's decision to fine the firm was just because of the company's dereliction of duty, the court verdict stated.
The plaintiff's attorneys said yesterday they have had no plan for appealing the matter to a higher court.
The plaintiff's client in the case, the Zhengzhou Yutong Coach Corporation, colluded with its bank and gave a false bank statement to the accounting firm.
The commission confiscated the Huawei Accounting Consultation Company's illegal income of 300,000 yuan (US$36,100) in 2002, since Huawei did not fulfill its duty in auditing the 1999 year-end report for the Yutong Co in 2001.
The accounting firm said its client should be held fully responsible for the false financial report, not the firm.
After auditing the financial report, the commission found that the Yutong Company had placed the figure of its debt at 135 million yuan (US$16 million) less than its real debt to cover up its red ink, in an attempt to meet the requirements for being listed. The commission also administered punishment to the coach company.
(China Daily November 21, 2003)
