Highlights
- SEC creates a Cross-Border Task Force to address fraud risks in international transactions.
- Gatekeepers such as auditors and underwriters face heightened scrutiny and liability.
- Companies should prepare for new disclosure obligations and rule changes.
On September 5, 2025, the U.S. Securities and Exchange Commission (SEC) announced the launch of a Cross-Border Task Force within its Division of Enforcement. This new task force aims to bolster the SEC's efforts to identify and combat cross-border fraud — particularly schemes involving foreign-based companies and their intermediaries — that present growing risks to U.S. investors and public companies engaging in global markets.
Key Features and Priorities of the Task Force
- Focused Enforcement on Foreign-Based Companies: The Cross-Border Task Force will prioritize investigations of potential violations of U.S. federal securities laws by foreign issuers, including market manipulation schemes such as "pump-and-dump" and "ramp-and-dump" activities targeting U.S. investors.
- Scrutiny of Gatekeepers: Enforcement will also closely examine the conduct of gatekeepers — including auditors and underwriters — that facilitate access to the U.S. capital markets for foreign companies. Companies that rely on such intermediaries should require robust due diligence and compliance protocols.
- Special Attention to Risky Jurisdictions: The task force will pay particular attention to companies operating in jurisdictions where governmental controls and other factors present unique risks. The SEC's recent press release specifically referenced concerns relating to companies based in China and the investor protection challenges they present.
- Interdivisional Coordination & Future Rulemaking: SEC Chairman Paul S. Atkins indicated that additional divisions and offices within the SEC are assessing further actions to enhance investor protection, including updates to disclosure guidance and possible rule changes. Organizations should monitor forthcoming SEC guidance related to cross-border activity.
Implications for Public Companies and Market Participants
- Renewed Compliance Vigilance Required: Companies with international operations — particularly those who access U.S. capital markets from abroad — should reassess their compliance controls, disclosures, and risk management programs to address heightened regulatory scrutiny.
- Increased Liability for Gatekeepers: Auditors, underwriters, and other professionals serving foreign issuers face increased enforcement risk. These intermediaries should ensure their engagement and review processes meet SEC expectations and are responsive to evolving cross-border risk factors.
- Anticipate Additional Regulatory Guidance: Firms should anticipate new disclosure obligations and potential rule changes as the SEC expands its efforts to strengthen investor confidence in global markets.
- Watch for Enforcement Trends: The SEC emphasized its commitment to prosecuting bad actors — including companies, intermediaries, gatekeepers, and traders — seeking to exploit international borders to circumvent U.S. regulations.
Barnes & Thornburg is closely monitoring SEC announcements and regulatory developments affecting cross-border capital markets activity. Companies and professionals with exposure to these risks are encouraged to review compliance policies, coordinate with counsel, and remain vigilant for updates to SEC enforcement priorities and guidance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
