SAN FRANCISCO (AP) -- Investors retreated from major Chinese companies Thursday on concerns that they will be dropped from American exchanges after a U.S. judge barred some of the world's largest auditing firms from working for them.
An administrative law judge for the Securities and Exchange Commission ruled Wednesday that the Chinese arms of the accounting firms PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young improperly withheld documents from fraud investigators. The "Big Four" accounting firms argued that China's strict secrecy laws had prevented them from turning over the requested documents.
The SEC judge, Cameron Elliot, wants to ban the firms from providing audits for Chinese companies for six months. Such audits are required for companies listed on U.S. stock exchanges.
The accounting firms said they would appeal and did not intend to stop auditing their corporate clients.
Major Chinese companies such as Internet search service Baidu Inc. and oil giant PetroChina Co. Ltd. are listed in the U.S. If they were de-listed from the New York Stock Exchange or Nasdaq, the Chinese companies could still trade on a Hong Kong exchange accessible to U.S. investors.
In a Thursday research report, Stifel Nicolaus analyst George Askew predicted that the accounting uncertainty would hang over the stocks for much of this year. Nevertheless, Askew isn't changing his ratings on any of the Chinese companies that he tracks.
Baidu's stock slid $9.37, or 5.4 percent, to $165.66 in Thursday's afternoon trading while PetroChina's shares shed $3.70, or 3.6 percent, to $100.64. Other notable declines occurred at: SINA Corp., down $4.27, or 5.5 percent, to $72.83; Qihoo 360 Technology Co. Ltd, down $3.58., or 3.7 percent, to $92.34; E-Commerce China Dangdang Inc., down $1.08, or 9.7 percent, to $10.01; and Sohu.com Inc., down $1.92, or 2.5 percent, to $75.05.
The declines in the U.S. came after declines on Asian exchanges over worries about slowing economic growth in China.