The Chinese government pushed back at suggestions that its officials have been uncooperative in U.S. efforts to crack down on stock swindles that have cost American investors billions of dollars.
"Groundless accusation will not conduce to our friendly cooperation," said Karen Kang, a spokeswoman for the Chinese consulate in New York.
Kang's comments came in reaction to an ABC News interview with the outgoing chairman of the U.S. Securities and Exchange Commission, Mary L. Schapiro, who saw a spike in alleged fraud by Chinese companies that had been listed on major American stock exchanges. An ABC News investigation that aired Wednesday found that since 2010 more than 70 companies have been kicked off or left the NASDAQ and the two trading floors run by the New York Stock Exchange after reports surfaced alleging fraud and financial irregularities.
WATCH the 'Nightline' report on alleged Chinese scams.
"Dozens of companies have been delisted from our exchanges due to economy irregularities and outright fraud," said Dan David, vice president of GeoInvesting, LLC, a firm that monitored the Asian investment craze. "They raised hundreds of millions, some companies, that is outright money that was taken from investors that they'll never see again."
Schapiro said the SEC opened 40 cases against Chinese firms during her tenure, targeting financial schemes she described as "brazen" and "extraordinary." Schapiro, who stepped down in December, said that when she asked Chinese Vice Premier Wang Qishan for help during a trip to Beijing in July her requests were rebuffed.
"We haven't yet achieved a level of cooperation that makes it possible for us to get access to Chinese companies the way we need," Shapiro said. "We will fight hard to try to secure recovery for U.S. investors. But it's harder when we don't have the cooperation of the foreign government."
Kang disputed her account.
"As far as we know, the securities regulative agencies from China and the U.S.A have been exchanging views on this issue," she said. "It is in the common interest of both sides to have win-win cooperation."
Schapiro said cooperation from China has been in short supply not only as the SEC has been investigating the stack of fraud allegations against Chinese companies, but in sorting out a way to protect investors from future swindles. At the heart of the diplomatic impasse, she said, was disagreement over the ability for auditors to gain access to the financial books of Chinese companies.
China has maintained that, in many cases, those papers would reveal state secrets and therefore cannot be reviewed by the local subsidiaries of U.S. auditors.
"We rely on the auditors to do rigorous reviews of the financial statements of the companies and attest to their accuracy," Schapiro said, calling that step a "really an important part of why our securities markets actually work well."
Last month, the SEC took the unusual step of filing a civil case against five top auditing firms, accusing them of their "willful refusal" to provide internal work papers for Chinese companies that had been accused of fraud.
Deloitte, one of the accounting giants whose Chinese subsidiaries were targeted in the SEC enforcement action, filed court papers describing the bind it faced. "The SEC has long been aware that the [Chinese government] forbids China-based audit firms to produce audit work papers directly to the SEC, and yet the SEC chose to allow China-based companies to sell securities in the United States despite those restrictions," the court filing said.