SEC Unveils Cross-Border Task Force to Hunt Global Market Schemes

The U.S. Securities and Exchange Commission (SEC) has intensified its regulatory scrutiny of cross-border market manipulation, with a specific focus on U.S. firms suspected of involvement in pump and dump schemes linked to Chinese operations. According to a Financial Times report, the SEC is targeting American companies that may have facilitated or participated in manipulative trading practices originating from China. Pump and dump schemes typically involve artificially inflating the price of a security through misleading marketing before selling shares at the inflated price, leaving other investors with significant losses when the price collapses.

In a related move, the SEC announced the formation of a Cross-Border Task Force on September 5, 2025. The Task Force is intended to strengthen and enhance the Enforcement Division’s efforts to identify and combat cross-border fraud that affects U.S. investors. Its initial priority is the investigation of potential securities law violations by foreign-based companies, particularly those involved in market manipulation schemes such as "pump and dump" and "ramp and dump." The Task Force aims to address issues where foreign companies, often operating in markets with opaque structures such as China, are used as vehicles for fraudulent activity.

The formation of the Task Force aligns with broader regulatory efforts by the Trump Administration to level the playing field for U.S. companies and investors. The focus on China reflects longstanding concerns regarding foreign company listings and audit oversight, particularly in light of China’s legislative restrictions that have limited foreign auditors’ access to Chinese company records. This has created concerns about the integrity of financial reporting by Chinese firms listed in the U.S. market. The Task Force also emphasizes the role of gatekeepers such as auditors and underwriters, who facilitate access to U.S. capital markets for foreign companies. The SEC’s emphasis on these gatekeepers highlights its intent to hold accountable those who enable fraud through lax compliance or oversight.

The Task Force’s scope includes not only direct investigations into fraudulent companies but also the involvement of other SEC divisions to support cross-border enforcement. For instance, the Division of Corporation Finance may consider updating disclosure guidelines for public companies, while the Division of Trading and Markets will regulate broker-dealers and ensure market integrity. The Division of Examinations will also play a role in reviewing registered broker-dealers and investment advisers. This multifaceted approach signals the SEC’s readiness to pursue complex cases involving entities and not just individual actors.

While the Task Force operates within the limits of U.S. statutory and jurisdictional authority, the SEC frequently asserts jurisdiction over foreign actors whose activities have effects in U.S. markets. The agency has extensive access to records and the ability to compel production through memoranda of understanding with foreign regulators. This enables the SEC to investigate and enforce rules even in jurisdictions where direct oversight is limited. Foreign private issuers with U.S. securities are particularly at risk, and the Task Force will examine potential violations of accounting and disclosure standards, including audit quality by foreign-based auditors.

For companies operating in international markets, the Task Force’s formation underscores the importance of robust compliance programs and transparent reporting. Foreign private issuers with U.S. listings should review the accuracy of their filings, including Forms 20-F and offering materials, to avoid misstatements. They should also evaluate their records retention and data privacy practices, especially in light of differences across jurisdictions. Given the SEC’s heightened enforcement focus, companies must remain vigilant about maintaining high standards of transparency and accountability in their dealings with U.S. markets.