U.S. Investors Get New Shield Against Global Fraud Schemes

The Securities and Exchange Commission (SEC) has announced the formation of the Cross-Border Task Force, a new initiative aimed at strengthening enforcement actions against cross-border securities fraud, particularly targeting fraudulent activities that threaten U.S. investors. The task force will focus on investigating potential violations of U.S. federal securities law by foreign-based companies, with a particular emphasis on schemes such as “pump-and-dump” and “ramp-and-dump” that manipulate market prices and mislead investors. It will also examine the role of intermediaries like auditors and underwriters in facilitating these activities. The initiative is part of the SEC’s broader effort to address investor risks associated with companies from foreign jurisdictions, especially those from countries where government influence over business operations may complicate due diligence and transparency for U.S. investors [1].

The Cross-Border Task Force will operate under the SEC’s Division of Enforcement and is designed to consolidate investigative resources and expertise to address transnational fraud more effectively. SEC Chairman Paul S. Atkins emphasized the commission’s commitment to upholding investor protections and stated that the task force will allow the SEC to “use every available tool to combat transnational fraud.” This includes not only investigating fraudulent schemes but also examining potential rule changes and disclosure requirements that could further protect U.S. investors from risks associated with foreign-listed companies [1]. Atkins also directed other divisions and offices within the SEC to collaborate on recommendations for improving disclosure standards and investor safeguards, signaling a coordinated approach to cross-border regulatory enforcement.

The initiative aligns with recent actions by financial regulators and exchanges to enhance oversight of foreign-listed securities. For example, Nasdaq Inc. recently announced updates to its listing rules aimed at preventing extreme market volatility, particularly among Chinese companies listed on the exchange. These changes include accelerated processes for delisting companies found to be non-compliant with market integrity standards. Such measures reflect a growing concern among regulators and market participants about the risks associated with certain foreign companies, particularly those with limited transparency or regulatory oversight in their home jurisdictions [2].

The SEC’s enforcement strategy is also expanding to include gatekeepers—such as auditors and underwriters—who play a role in facilitating foreign companies’ access to U.S. capital markets. By targeting these intermediaries, the commission aims to address potential gaps in accountability that may enable fraudulent activities to go undetected. Division of Enforcement Director Margaret A. Ryan highlighted the importance of leveraging the division’s resources to combat international market manipulation and fraud. She emphasized the critical role of the task force in enforcing federal securities laws and protecting U.S. investors from transnational schemes [1].

In addition to enforcement efforts, the SEC has initiated public consultations to evaluate the regulatory framework for foreign private issuers. These entities currently receive certain exemptions from U.S. disclosure and reporting requirements, which the commission is now considering for potential revision. The agency’s June 2025 request for public feedback on these rules indicates a proactive approach to revising regulatory standards in response to emerging risks in the global capital markets. This development is part of a broader trend toward increased scrutiny of foreign-listed companies, particularly in light of high-profile enforcement actions and investor concerns about market integrity [2].

The Cross-Border Task Force represents a significant shift in the SEC’s enforcement priorities, underscoring a heightened focus on protecting U.S. investors from the risks associated with cross-border fraud. By expanding its investigative scope to include foreign-based companies and their gatekeepers, the commission aims to strengthen the integrity of U.S. capital markets and ensure that investor protections remain robust in an increasingly interconnected global financial system.

Source:

[1] SEC Announces Formation of Cross-Border Task Force to Combat Fraud (https://www.sec.gov/newsroom/press-releases/2025-113-sec-announces-formation-cross-border-task-force-combat-fraud)

[2] SEC Launches Task Force on Securities Fraud by Foreign Companies (https://finance.yahoo.com/news/sec-launches-task-force-securities-185603248.html)