The U.S. Securities and Exchange Commission has taken a major step to protect American investors from fraud originating overseas. By forming a dedicated Cross-Border Task Force, the regulator aims to identify and combat manipulative practices by foreign companies seeking access to U.S. markets.
Focus on Foreign-Based Manipulation
The newly established task force will initially investigate potential violations of U.S. federal securities laws tied to foreign companies. Among its priorities are market manipulation tactics, including “pump-and-dump” and “ramp-and-dump” schemes.
The team will also scrutinize gatekeepers such as auditors and underwriters who facilitate foreign companies’ access to American capital markets, ensuring they meet regulatory standards.
“We welcome companies from around the world seeking access to the U.S. capital markets,” said SEC Chairman Paul 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.”
Atkins added: “This new task force will consolidate SEC investigative efforts and allow the SEC to use every available tool to combat transnational fraud.”
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The SEC is particularly attentive to firms from jurisdictions like China, where government involvement and other local factors increase investor risk. These efforts highlight the agency’s commitment to confronting challenges that arise from globalized financial markets.
SEC Leadership Comments
Atkins also noted that the agency is exploring additional measures across multiple divisions, including potential new disclosure requirements and rule changes to strengthen investor protection.
By consolidating investigative resources and coordinating across divisions, the SEC aims to respond swiftly to cross-border threats, signaling to international companies that U.S. investor protection remains a top priority.
A June report from identity verification firm Veriff showed that one in every 20 ID verification attempts in financial services is now fraudulent, highlighting a sharp rise in online scams.
The report found that identity fraud in the financial sector jumped 21% over the past year, underscoring the escalating risks posed by emerging technologies. Over a third of U.S. consumers surveyed said they suffered financial losses that couldn’t be recovered. The damage is not limited to individuals.
