The U.S. Securities and Exchange Commission (SEC) announced the formation of a specialized task force designed to aggressively combat financial fraud originating from outside the nation's borders. Unveiled in Washington D.C. on September 5, 2025, the new Cross-Border Task Force will consolidate and enhance the Division of Enforcement’s efforts to protect U.S. investors from complex international schemes. The initiative will initially focus on investigating foreign-based companies for potential violations of federal securities law, with a sharp focus on market manipulation and the accountability of financial "gatekeepers" like auditors and underwriters.

• America's top financial regulator is assembling a new team to police the globe for financial crime targeting U.S. investors.
• Specific schemes, from "pump-and-dump" to gatekeeper failures, that are now in the crosshairs.
• Companies from certain foreign jurisdictions are facing an unprecedented new level of regulatory scrutiny.

The creation of this task force comes at a time when global capital markets are more interconnected than ever. The ease with which foreign companies can gain access to U.S. exchanges, coupled with the speed of digital communication, has created fertile ground for sophisticated cross-border fraud. While the U.S. markets have long attracted international firms seeking capital and prestige, this openness has also been exploited by bad actors. The SEC's move signals a recognition that a more specialized and proactive approach is required to address these evolving threats. This initiative is a clear statement that robust investor protection remains the agency's paramount priority in an increasingly borderless financial world.

A primary target for the new task force is the pervasive issue of market manipulation. The SEC specifically called out "pump-and-dump" and "ramp-and-dump" schemes. In a classic pump-and-dump, fraudsters use false or misleading positive statements to artificially inflate the stock price of a thinly traded company, then sell their own shares at the peak, leaving other investors with worthless stock. The "ramp-and-dump" is a variation often seen with foreign stocks, where perpetrators exploit lower liquidity and less stringent reporting requirements to manipulate prices. By dedicating resources to unraveling these complex international webs, the task force aims to disrupt the mechanics of these schemes before they can inflict widespread harm on the U.S. investing public.

Significantly, the task force is not only pursuing the direct perpetrators but is also turning its attention to the financial "gatekeepers." Auditors and underwriters play a critical role in vetting the companies that seek to list on U.S. exchanges. They are responsible for verifying financial statements and ensuring proper disclosures, acting as a first line of defense for investors. By focusing enforcement efforts on these intermediaries, the SEC is signaling a strategic shift. The message is clear: any firm that helps a fraudulent company access U.S. capital markets, whether through negligence or complicity, will be held accountable. This gatekeeper focus is a powerful tool for upholding federal securities law and preventing fraud at its source. As SEC continues to keep the market in check and on clear regulatory grounds, institutional investments are also expected to flow in.

The SEC also acknowledged the unique risks associated with companies from specific foreign jurisdictions, such as China, "where governmental control and other factors pose unique investor risks." This points to long-standing challenges the agency has faced, including difficulties in accessing audit work papers due to foreign data-security laws. This lack of transparency can obscure the true financial health of a company, making it easier to perpetrate cross-border fraud. The new task force will be equipped to handle these nuanced geopolitical and legal challenges, ensuring that all companies accessing U.S. markets are held to the same high standards of disclosure and accountability.

To ensure a comprehensive approach, SEC's Pro Crypto Chairman Paul S. Atkins has directed other SEC divisions—including Corporation Finance, Examinations, and Trading and Markets—to recommend further actions. This multi-pronged strategy will likely result in updated disclosure guidance for foreign issuers and potential rule changes to bolster investor protection. It transforms the initiative from a purely punitive enforcement effort into a holistic regulatory enhancement. For American investors, the formation of the Cross-Border Task Force is a welcome development. While it may lead to increased scrutiny and potential delistings for non-compliant foreign firms, its ultimate goal is to create a safer and more transparent market, reinforcing the integrity of the U.S. capital system.

Expert Opinions and Quotes

“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.” — Margaret A. Ryan, Division of Enforcement Director - Source

FAQs

What is the SEC's new Cross-Border Task Force?
It is a specialized unit within the SEC's Division of Enforcement created to identify, investigate, and combat cross-border fraud. Its focus is on violations by foreign-based companies that harm U.S. investors.

Why is this task force being created now?
The task force was created to address the growing threat of sophisticated international fraud schemes in today's highly globalized capital markets. It represents a proactive step to enhance investor protection against these evolving risks.

Who are the "gatekeepers" the SEC is targeting?
The "gatekeepers" are financial intermediaries, specifically auditors and underwriters, who are responsible for vetting foreign companies before they can access U.S. capital markets. The SEC is holding them more accountable for their role in preventing fraud.

What kind of illegal activity will the task force investigate?
The task force will investigate violations of U.S. securities law, with an initial focus on market manipulation schemes like "pump-and-dump" and "ramp-and-dump," as well as fraudulent disclosures by foreign issuers.