The Securities and Exchange Commission (SEC) has announced the establishment of a new task force dedicated to bolstering the Division of Enforcement’s efforts against cross-border fraud that harms U.S. investors.
Dubbed the Cross-Border Task Force, this specialized unit will initially concentrate its investigations on potential violations of U.S. federal securities law by foreign-based companies. A primary focus will be placed on combating market manipulation schemes, such as "pump-and-dump" and "ramp-and-dump" tactics. Additionally, the task force intends to direct its enforcement actions toward crucial "gatekeepers," particularly auditors and underwriters, who facilitate these companies' entry into U.S. capital markets. The initiative will also scrutinize potential securities law infractions involving companies from foreign jurisdictions like China, where governmental control and other unique factors can pose distinct risks to investors.
SEC Chairman Paul S. Atkins emphasized the Commission's firm stance. "We welcome companies from around the world seeking access to the U.S. capital markets," Chairman Atkins stated, "but we will not tolerate bad actors – whether companies, intermediaries, gatekeepers or exploitative traders – that attempt to use international borders to frustrate and avoid U.S. investor protections." He added that this new task force will consolidate the SEC's investigative efforts, enabling the agency to deploy every available tool in its arsenal against transnational fraud. Chairman Atkins further revealed that he has instructed staff across other SEC divisions and offices, including Corporation Finance, Examinations, Economic and Risk Analysis, Trading and Markets, and the Office of International Affairs, to evaluate and recommend additional measures to enhance U.S. investor protection, including new disclosure guidance and any necessary rule amendments.
Margaret A. Ryan, Director of the Division of Enforcement, underscored the significance of the new endeavor. “The Cross-Border Task Force will leverage the Division of Enforcement’s resources and expertise to combat international market manipulation and fraud," Ryan commented, expressing satisfaction in being part of this critical initiative to uphold federal securities laws and safeguard U.S. investors.