ACCESSING FOREIGN AUDIT WORK PAPERS AND THE CONFLICTING NON-U.S. LAWS DEFENSE: A RECENT CASE STUDY.

Recently, an SEC administrative judge suspended the Big Four accounting firms' China affiliates from practicing before the SEC for six months, citing the firms' refusal to turn over audit work papers requested by the SEC. This decision has since sparked a debate over the SEC's authority to access foreign audit work papers when those documents are stored in jurisdictions that restrict or prohibit their transfer without authorities' prior approval. In this Note, I trace the legislative history defining the SEC's everexpanding power to access foreign audit work papers with a focus on section 106(e) of the Sarbanes-Oxley Act of 2002. I also map out the development of the violation of non-U.S. laws defense that accounting firms frequently assert to counter the SEC's document requests. Against this background, I will argue that the administrative law judge's interpretation of section 106(e) is seriously flawed. It may lead to untenable results that could be contrary to Congress's intent and are certainly against the purposes of the SEC's own disciplinary proceedings. Drawing upon the federal courts' long-time jurisprudence in handling extraterritorial discovery disputes in civil litigations, I propose an alternative analytical framework that embraces a "good faith" defense to balance the SEC's need to access foreign audit work papers with a foreign country's authority to regulate its accounting profession. [ABSTRACT FROM AUTHOR]