The Securities and Exchange Commission (SEC) has formed a cross-border task force within its Division of Enforcement to lead its effort to combat cross-border fraud schemes harming U.S. investors. The task force will focus on foreign-based issuers, intermediaries, and overseas traders involved in transnational fraud and market manipulation. Announcing his first major enforcement initiative, SEC Chairman Paul Atkins said the task force is designed to “consolidate” the agency’s international investigative efforts and will draw on tools across the SEC.
This renewed focus on transnational schemes and foreign actors, particularly those based in China, parallels new enforcement priorities of other U.S. regulators, including the Department of Justice, aimed at combating transnational schemes that harm U.S. investors and the global competitiveness of U.S. companies.
Task Force Priorities
The task force’s priorities include:
- Identifying violations by foreign-based companies and issuers, particularly market manipulation conducted via “pump-and-dump” and “ramp-and-dump” schemes.
- Targeting foreign-based companies “from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks.”
- Increased scrutiny of “gatekeepers,” including auditors and underwriters, whose activities provide access to U.S. capital markets or help facilitate transnational fraud schemes.
These enforcement priorities align with many of the broader Trump Administration objectives as well as Atkins’s stated focus on protecting U.S. retail investors, combating fraud, and holding individual wrongdoers accountable. The task force’s immediate prioritization of cross-border market manipulation schemes, such as “pump-and-dumps” and “ramp-and-dumps,” is consistent with that mandate. The SEC has long pursued these types of schemes in the domestic context, and its significant agency experience could bring many foreign-based market participants and intermediaries under the agency’s scrutiny.
In late December 2024, the Southern District of New York held in S.E.C. v. Passos that the SEC may apply the Exchange Act’s antifraud provisions to foreign misconduct if it was allegedly caused by a domestic concern or has an effect in the United States. The court applied Section 929P of the Dodd–Frank Act, which legislatively overruled the Supreme Court’s 2010 holding in Morrison v. National Australia Bank Ltd. that the federal securities laws do not extend to extraterritorial activity regardless of its cause or effect. Moreover, SEC leadership of cross-border investigations can effectively facilitate parallel civil and criminal enforcement of international securities law violations because the SEC is not constrained by the secrecy obligations of Federal Rule of Criminal Procedure 6(e) and, as provided for in the SEC’s Form 1662 (the agency’s notice to recipients of administrative legal process), may share evidence with the DOJ through a simple access request.
Broader Context: A Focus on Foreign Issuers and Actors
The task force’s formation comes at a time when scrutiny of foreign issuers, particularly those in China, is intensifying due to concerns about the effectiveness of foreign disclosure regimes and the resulting competitive disadvantages for domestic issuers in the U.S. capital markets. In May 2025, Members of Congress demanded information from Atkins regarding U.S. regulators’ alleged inability to obtain material information from Chinese companies, even suggesting that they be delisted. The next month, the SEC published a concept release seeking comments on the definition of “foreign private issuer” (FPI), specifically whether that term should be revised to reflect the current makeup of FPIs and their home-country disclosure regimes. The release highlighted that China had become the most common headquarters for FPIs whose equities traded exclusively in the United States, raising concerns about their level of transparency.
Atkins has suggested that if foreign issuers lack meaningful disclosure requirements or securities law oversight in their home jurisdictions, it is appropriate to consider whether they should receive FPI accommodations under U.S. securities laws. The creation of the task force combines this ongoing regulatory scrutiny of foreign-based issuers with the prospect of immediate enforcement efforts targeting those same entities.
While the task force will have a broad international enforcement focus, its announcement is notable in specifically referencing China as a jurisdiction of interest. This China-specific focus parallels certain DOJ white-collar enforcement priorities, including those announced by the acting assistant attorney general in May 2025. At that time, the DOJ emphasized the prosecution of fraud and market manipulation, including “ramp-and-dump” schemes, facilitated through variable interest entities, which it noted are often “Chinese-affiliated companies listed on U.S. exchanges.” The SEC and DOJ are likely to continue coordinating on these cross-border enforcement efforts – especially involving Chinese issuers – where transnational schemes support potential criminal and civil liability.
Recent enforcement actions by the SEC and DOJ provide insight into the types of schemes the Task Force may prioritize and investigate in collaboration with the DOJ.
Earlier this month, in United States v. Yan Zhai, the DOJ filed charges against multiple foreign nationals, including the co-CEO of a publicly traded Chinese company, for their roles in a $100 million social media “pump-and-dump scheme” involving a Cayman Islands company headquartered in China. According to the DOJ, the case was investigated by the FBI together with the SEC’s Office of Inspector General. Likewise, in March, the DOJ announced asset seizures and criminal charges against seven foreign nationals in United States v. Cedric, another alleged “ramp-and-dump” scheme involving a Cayman Islands company headquartered in China. In announcing the charges, the DOJ credited the SEC’s valuable assistance in the investigation. That same month, the DOJ and SEC announced the parallel actions United States v. Safi and S.E.C. v. Safi, charging several foreign nationals in a years-long alleged international insider trading scheme involving 11 international co-conspirators and multiple foreign-based issuers listed in the United States.
Taken together, these developments reflect the SEC’s increasingly expansive approach to policing transnational fraud and market manipulation, especially where foreign-based issuers and their intermediaries intersect with U.S. markets. By supplementing ongoing regulatory initiatives with targeted enforcement, the task force signals a new era of vigilance, collaboration, and accountability.
Scrutinizing Intermediaries
The SEC’s announcement makes clear that in addition to foreign-based issuers, intermediaries and gatekeepers – such as auditors, underwriters, and other advisers who assist foreign-based issuers in reaching U.S. investors – will face heightened SEC scrutiny. Where the SEC has identified a transnational scheme involving a foreign-based issuer, scrutiny of the intermediaries who have worked for the foreign-based issuer could become a routine first step since many of these gatekeepers may be U.S. companies or individuals that would provide the SEC with a comparably easier path to obtaining information and data concerning suspected transnational schemes.
Conclusion
The creation of the task force aligns with Atkins’s enforcement agenda and broader U.S. efforts to combat transnational schemes harming U.S. investors. For foreign issuers and the gatekeepers on which they rely to reach U.S. investors, the new task force signals heightened enforcement risk and closer scrutiny of their conduct, internal controls, and disclosures. Entities operating across borders should reassess and reinforce their compliance, diligence, and disclosure practices to mitigate the risk of enforcement action and be better positioned if placed under the SEC microscope.
If you have any questions, or would like additional information, please contact one of the attorneys on our White Collar, Government & Internal Investigations team.
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