The Securities and Exchange Commission has announced the formation of a new Cross-Border Task Force designed to strengthen enforcement efforts against international fraud targeting U.S. investors. This specialized unit will focus on investigating securities law violations by foreign-based companies, with particular attention to market manipulation schemes like "pump-and-dump" operations.
The task force will target three key areas: foreign companies engaging in fraudulent activities, the gatekeepers (auditors and underwriters) that help these companies access U.S. markets, and companies from jurisdictions like China where government control creates unique investor risks.
SEC Chairman Paul S. Atkins emphasized the commission's welcoming stance toward legitimate international companies while drawing a firm line against bad actors. "We will not tolerate bad actors... that attempt to use international borders to frustrate and avoid U.S. investor protections," Atkins stated, noting that the task force will consolidate investigative efforts and utilize all available enforcement tools.
The initiative extends beyond the Division of Enforcement, with Chairman Atkins directing other SEC divisions, including the Division of Corporation Finance, to recommend additional protective measures, including new disclosure guidance and potential rule changes. This comprehensive approach signals the SEC's commitment to adapting its regulatory framework to address evolving cross-border threats in today's interconnected financial markets.
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