Question for the board - if the SEC succeeds in getting access to Deloitte's records, and they ultimately imply/suggest/prove that Deloitte's China subsidiary was guilty of misfeasance or malfeasance, would US investors be able to recover anything by means of a class action against Deloitte in the US?
If guilty, does guilt transfer from China subsidiary to the US parent? Could anyone here collect anything?
This is more intellectual curiosity more than anything else. I am not a big fan of class actions as if they do succeed in proving a defendant guilty (big IF) and in enforcing a collectable judgement against that defendant (even bigger IF) they are, at best and with all the maybes, too little too late.
I do think that if a collectable judgement was rendered against Deloitte that this might be the best way to get transparency from Chinese companies listed here. If the US parent had to pay up for its China subsidiary not applying US standards, then to avoid further liability all auditors would either apply those standards or make it clear that they were in fact auditing to a less stringent standard in China.
A Chinese company could allow its auditors to audit to either a full US or lesser standard, but it would be clear which was used (the auditor would disclose this in SEC filings) and those companies allowing audits to only the less stringent standard would be discounted accordingly.
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