U.S. Regulators Step Up Global Fraud Fight with New Cross-Border Task Force

The U.S. Securities and Exchange Commission (SEC) has announced the formation of a new Cross-Border Task Force to combat fraudulent schemes targeting U.S. investors, particularly those originating from foreign jurisdictions. This initiative, unveiled by SEC Chairman Paul S. Atkins, represents a coordinated effort to consolidate enforcement resources and address transnational market manipulation, such as "pump-and-dump" and "ramp-and-dump" schemes. The task force will focus on foreign-based companies, their gatekeepers—including auditors and underwriters—and the broader risks associated with governmental influence in foreign markets, such as those in China [1].

The Cross-Border Task Force will work closely with other SEC divisions and offices, including the Office of International Affairs and the Division of Enforcement, to develop new disclosure rules and enforce securities laws more effectively. Atkins emphasized the agency’s commitment to balancing openness to global capital with the protection of U.S. investors from fraudulent actors seeking to exploit international borders [1]. Division of Enforcement Director Margaret A. Ryan highlighted the task force's role in leveraging existing enforcement capabilities to combat cross-border fraud, reinforcing the agency's commitment to maintaining investor trust [1].

The launch of this task force comes amid growing concerns over foreign-based companies exploiting U.S. capital markets. Specifically, firms from jurisdictions like China, which face scrutiny due to their unique investor risks, are under heightened regulatory focus. The SEC cited the prevalence of market manipulation schemes involving these entities, which often involve orchestrated price surges followed by sudden collapses, leaving retail investors with significant losses [2]. This aligns with broader enforcement priorities under the Trump administration, which has increasingly prioritized regulatory scrutiny of foreign-listed firms [2].

The regulatory focus on foreign fraud is supported by recent actions by U.S. exchanges, including Nasdaq, which has taken steps to tighten listing standards for small foreign companies, particularly those based in China. In September, Nasdaq proposed a new rule requiring companies primarily operating in China, including Hong Kong and Macau, to raise at least $25 million in their initial public offerings (IPOs) to list on the exchange. The proposal also includes higher minimum float requirements and faster delisting processes for non-compliant firms. These changes are intended to address patterns of potential pump-and-dump activity involving Chinese companies, which account for a disproportionate share of regulatory referrals despite representing less than 10% of Nasdaq listings [4].

Nasdaq’s actions reflect broader concerns about the risks posed by speculative foreign listings, which have drawn criticism from Wall Street veterans and investor advocates. Since 2020, dozens of Chinese companies have raised modest amounts in IPOs, many of which have seen significant volatility before collapsing in value. Nasdaq’s decision to tighten rules follows mounting pressure from brokers and trading firms who argue that lax listing standards have enabled dubious companies—especially those from foreign jurisdictions—to access U.S. markets [4].

The SEC’s cross-border enforcement strategy is not limited to the U.S. capital markets. It coincides with a joint initiative with the Commodity Futures Trading Commission (CFTC) to discuss regulatory harmonization priorities at a roundtable on September 29. SEC Chairman Atkins and CFTC Acting Chairman Caroline D. Pham emphasized the importance of collaboration in addressing market complexities and enhancing regulatory clarity. This partnership aims to strengthen investor protections and foster regulatory alignment across U.S. financial markets [3].

The formation of the Cross-Border Task Force and the broader regulatory actions taken by U.S. exchanges highlight an emerging trend of increased scrutiny of foreign-based securities. While these initiatives aim to protect investors from manipulation, they also signal a shift in how U.S. regulators and exchanges approach the integration of foreign capital into domestic markets. The long-term implications of these efforts remain to be seen, but they underscore the SEC’s commitment to addressing transnational fraud and safeguarding the integrity of U.S. capital markets.

Source:

[1] SEC Announces Formation 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)

[3] SEC Announces International Fraud Task Force Targeting 'Pump-And-Dump' Schemes (https://finance.yahoo.com/news/sec-announces-international-fraud-task-214447032.html)

[4] Pump-and-Dump Worries Prompt Nasdaq to Tighten China Rules (https://finance.yahoo.com/news/pump-dump-worries-prompt-nasdaq-121200564.html)