Clifford Chance

Hong Kong Court orders Ernst and Young to hand over auditing records to Hong Kong regulator (Re-issued)

3 June 2014

In an unprecedented decision handed down on 22 May 2014, the Hong Kong Court of First Instance (CFI or, the court) has ordered the Hong Kong office of the global accounting firm, Ernst and Young (EY) to produce audit working papers and underlying accounting documents to the Securities and Futures Commission (SFC), related to work for its former client, the PRC-based water services company, Standard Water Limited (SW)1. Following SW's withdrawal of its Hong Kong listing application in 2010, the SFC launched an investigation in 2012. EY objected to production of its audit working papers related to SW, claiming that it would risk EY contravening PRC's State secrets laws. This is the first Hong Kong case under section 185 of the Securities and Futures Ordinance (SFO) where a court has been asked to inquire into a Hong Kong auditor's non-compliance with notices issued by the SFC.

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