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The SEC has established a Cross-Border Task Force to strengthen enforcement against cross-border fraud impacting U.S. investors. This initiative will investigate foreign companies for potential violations of U.S. federal securities laws, particularly focusing on market manipulation schemes such as 'pump-and-dump'. The task force will also scrutinize auditors and underwriters that assist these companies in accessing U.S. markets, with particular attention to risks from jurisdictions like China. SEC Chairman Paul S. Atkins underscored the importance of protecting U.S. investors from exploitative practices that exploit international boundaries. The task force will consolidate investigative efforts and explore recommendations for improved disclosure and regulatory changes to enhance investor protections.
Statement Summary
The Securities and Exchange Commission (SEC) has launched a Cross-Border Task Force aimed at enhancing enforcement against cross-border fraud that affects U.S. investors. This task force will investigate violations of U.S. federal securities laws by foreign companies, focusing on market manipulation schemes like "pump-and-dump". It will target auditors and underwriters assisting these companies in accessing U.S. markets, especially those from jurisdictions like China that present unique risks.
SEC Chairman Paul S. Atkins emphasized the agency's commitment to protecting U.S. investors against bad actors exploiting international borders. The initiative will consolidate investigative efforts and seek further recommendations for improved disclosure and potential rule changes to bolster investor protection.
Original Statement
The Securities and Exchange Commission today announced the formation of a task force that will strengthen and enhance the Division of Enforcement’s efforts to identify and combat cross-border fraud harming U.S. investors. The Cross-Border Task Force will focus initially on investigating potential U.S. federal securities law violations related to foreign-based companies, including potential market manipulation, such as “pump-and-dump” and “ramp-and-dump” schemes.
The task force also will focus enforcement efforts on gatekeepers, particularly auditors and underwriters, which help these companies access the U.S. capital markets. In addition, it will examine potential securities law violations related to companies from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks.
“We welcome companies from around the world seeking access to the U.S. capital markets,” said SEC Chairman Paul S. Atkins. “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. This new task force will consolidate SEC investigative efforts and allow the SEC to use every available tool to combat transnational fraud.”
“I have also directed the staff in other SEC divisions and offices, including the Divisions of Corporation Finance, Examinations, Economic and Risk Analysis, and Trading and Markets as well as the Office of International Affairs, to consider and recommend other actions that would better protect U.S. investors, including new disclosure guidance and any necessary rule changes,” continued Chairman Atkins.
Division of Enforcement Director Margaret A. Ryan said, “The Cross-Border Task Force will leverage the Division of Enforcement’s resources and expertise to combat international market manipulation and fraud. We are pleased to be part of this critical effort to enforce the federal securities laws and protect U.S. investors.”