The SEC in the U.S. can’t regulate what “it can’t see” and “what it can’t see” are the audit working papers prepared by the auditors of U.S. registrants that are located in China (http://dealbook.nytimes.com/2012/12/04/s-e-c-s-fair-but-futile-stance-on-china-based-auditors/).
The SEC learned of this problem when they requested that a major global audit firm provide the SEC investigators their working papers for the audit of a China-based company that is a U.S. registrant. The audit firm refused citing concerns about local regulatory prohibitions, i.e., Chinese regulatory authorities prohibit providing those documents to foreign regulatory agencies without their, the Chinese regulatory agency’s, approval.
All of the Big Four auditing firms and several other major regional firms are dealing with this problem.
As pointed out in a March 2013 article in Economia (http://economia.icaew.com/news/march-2013/sec-delays-big-four-china-decision), the SEC is currently delaying actions against the related firms while it negotiates for access to the requested working papers with the Chinese Regulatory Commission.