US Watchdogs target cross-border scams using dedicated units

The Securities and Exchange Commission has taken a major step towards protecting American investors from fraud that originated from overseas. By forming a dedicated cross-border task force, regulators aim to identify and combat operational practices by foreign companies seeking access to the US market.

Focus on foreign operations

The newly formed task force will first investigate potential violations of the US federal securities laws related to foreign companies. That priorities include market manipulation tactics such as “pump and dump” and “ramp and dump” schemes.

The team also scrutinizes gatekeepers such as auditors and underwriters who encourage foreign companies to access the US capital markets, ensuring they meet regulatory standards.

“We welcome businesses all over the world looking for access to the US capital markets,” said SEC Chairman Paul S. Atkins. “But we don’t tolerate bad actors, such as companies, intermediaries, gatekeepers, exploitative traders, and more, who try to use international borders to frustrate and avoid US investor protection.”

Atkins added: “This new task force will integrate the SEC’s research efforts and enable the SEC to combat cross-border fraud using all the tools available.”

The SEC is particularly careful with companies in jurisdictions like China where government involvement and other local factors increase the risk of investors. These efforts highlight the institution’s commitment to facing challenges arising from globalized financial markets.

SEC Leadership Comments

Atkins also said it is investigating additional measures across multiple sectors, including potential new disclosure requirements and changes to regulations to enhance investor protection.

By consolidating research resources and coordinating across sectors, the SEC aims to respond quickly to cross-border threats, indicating that US investor protection remains a top priority.

Expect continuous updates as this story evolves.