U.S. regulators Friday reached a historic accord with the China-based units of the “Big Four” accounting firms after a lengthy dispute stemming from their refusal to turn over audit documents in connection with companies being investigated for fraud.

    The U.S. Securities and Exchange Commission (SEC) said the Chinese units of Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG would each pay US$500,000 and admit that before 2012 they did not produce documents the agency had requested.

    The settlement lays out the process that the firms must follow for future record requests and also details the consequences that may face if they fail to follow it.

    The deal with the SEC notably does not suspend the firms from practicing as accountants for China-based companies listed on U.S. markets.

    The firms can face an automatic six-month suspension, however, if they fail to produce documents or provide records that the SEC deems to be deficient.

    The SEC could also start new fast-tracked enforcement actions or revive this case, which is suspended pending the outcome of future cooperation from the accounting firms.

    If the case is reopened, the firms would need to appeal it before the full five-member commission. But if they cooperate with all document requests, the SEC will dismiss the case after four years.

    In a joint statement, the Big Four said they were pleased to resolve the matter. “The firms’ ability to continue to serve all their respective clients is not affected by this settlement,” they said.

    The SEC first sued the Big Four firms in 2012 after it could not get access to audit work they had done for numerous companies suspected of accounting fraud.

    The firms have said providing the documents would violate Chinese secrecy laws and urged the U.S. and Chinese governments to work together on a long-term solution.

    The SEC sued the Big Four and a fifth firm called Dahua, which was previously a member of the BDO international network, in its own in-house administrative court.

    Last year, SEC Administrative Law Judge Cameron Elliot issued a scathing ruling that called for a six-month suspension of the Big Four from doing audit work for China-based companies listed on U.S. markets.(SD-Agencies)