The US Securities and Exchange Commission has launched a sweeping crackdown on international fraud, unveiling a new Cross-Border Task Force aimed at combating so-called pump-and-dump and ramp-and-dump schemes linked to overseas companies. According to an SEC press release issued Tuesday, the task force will target not only fraudulent issuers but also the professional gatekeepers—including underwriters, lawyers, and auditors—who may have enabled questionable firms to list in the United States.
As reported by the Financial Times, SEC officials have zeroed in on small professional service providers, sometimes referred to in the industry as “bilge bracket” firms, that facilitated access for Chinese companies seeking U.S. listings. Regulators argue that these firms exploited gaps in oversight and due diligence, making it easier for high-risk issuers to tap American investors.
The agency stressed that foreign location will not shield bad actors from accountability. “Issuers and professionals who believe cross-border distance can insulate them from our reach are mistaken,” SEC Chair Paul Atkins said in comments cited by Reuters. He added that the SEC welcomes global issuers but insists on “rigorous standards of transparency and fairness.”
According to reporting by the Wall Street Journal, the crackdown comes as Nasdaq simultaneously pushes through stricter listing requirements. These include a proposed minimum $25 million public float for companies from jurisdictions considered high risk, as well as faster delisting procedures for firms that fall short of compliance. The exchange said the changes are designed to address concerns about market manipulation tied to thinly traded micro-cap stocks.
Market analysts told the Financial Times that the measures were prompted by a string of collapses in Chinese small-cap stocks, which had been heavily promoted online before losing most of their value. Investors, particularly retail traders, have suffered significant losses, sparking concerns that U.S. markets are being used as a platform for cross-border fraud.
Some boutique investment banks are already retreating from underwriting such listings, according to industry sources quoted by the FT. Legal experts have also warned that the SEC may face resource challenges, as pursuing global enforcement cases often requires cooperation with regulators in jurisdictions that may be reluctant to assist.
Still, regulators argue the task force is a necessary step to safeguard U.S. markets. As reported by DLA Piper’s legal analysis, the SEC intends to coordinate closely with exchanges, law enforcement, and foreign regulators to ensure that global actors cannot exploit U.S. investors without consequence.
The combined efforts of the SEC and Nasdaq suggest a tougher enforcement era, one where the risks of cutting corners in international listings are rising sharply. For companies and advisers operating in high-risk jurisdictions, the message is clear: due diligence is no longer optional, and accountability is global.
