On September 5, 2025, the U.S. Securities and Exchange Commission (SEC) announced the creation of the Cross-Border Task Force ("Task Force") to identify and combat cross‑border fraud harming U.S. investors. The Task Force will primarily focus on investigating potential U.S. securities law violations related to foreign-based companies, such as market manipulation, and those gatekeepers, such as auditors and underwriters, which enable these companies to access U.S. capital markets. The SEC specifically called out "companies from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks."
The new Division of Enforcement Director Margaret A. Ryan, warned: "The Cross-Border Task Force will leverage the Division of Enforcement's resources and expertise to combat international market manipulation and fraud." Chairman Paul Atkins further made clear: "[W]e will not tolerate bad actors – whether companies, intermediaries, gatekeepers, or exploitative traders – that attempt to use international borders to frustrate and avoid U.S. investor protections." According to Commissioner Atkins, this new Task Force will consolidate SEC investigative and enforcement resources while "allow[ing] the SEC to use every available tool to combat transnational fraud." Chairman Atkins also has "directed the staff in other SEC divisions and offices...to consider and recommend other actions that would better protect U.S. investors, including new disclosure guidance and any necessary rule changes."
The Task Force reflects the Trump administration's stated focus of enforcing US federal law against foreign companies and other international actors which put U.S. companies at economic disadvantage abroad and harm U.S. investors. This "America First" approach is consistent with the U.S. Department of Justice's "Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime" memo and June 9, 2025 guidance related to the Foreign Corrupt Practices Act (summarized here and here, respectively).
The focus on transnational fraud and gatekeepers, however, is not new. The SEC has a longstanding practice of investigating U.S.-listed foreign companies – also known as foreign private issuers ("FPIs") – and their auditors. Indeed, in a December 7, 2018 statement, former SEC Chairman Jay Clayton, SEC Chief Accountant Wes Bricker, and PCAOB Chairman William Duhnke III stated, in part:
As the primary regulator of the world's largest securities markets, administering and enforcing the requirements for reliable financial reporting requires the SEC to be engaged in many topics that extend beyond the U.S. borders. Indeed, the flow of international capital investment presents challenges, not just for U.S.-listed companies and economic interests, but also for the SEC's efforts to protect transparency and accountability in financial reporting globally. Protecting transparency and accountability in financial reporting is vital.1
Similarly, the SEC has targeted gatekeepers and in particular foreign auditors in the past, because they, in the words of former Director of the Division of Enforcement Gurbir Grewal, "are often the first lines of defense against misconduct." 2 Indeed, former SEC Chairman Gary Gensler cautioned, "When lawyers—or other gatekeepers, like auditors and underwriters—breach their positions of trust and violate the securities laws, we will not hesitate to take action." 3 Likewise, the same December 7, 2018 statement quoted above discusses the vital role auditors perform in U.S. markets and specifically noted "the work of a [multinational company's] external auditor" is "critical" to ensuring the company's financial statements are accurate and reliable.4
Accordingly, we expect to see increased scrutiny by the SEC of FPIs and their auditors like in SEC v. Akazoo S.A. There, the SEC alleged a music streaming company based in Greece defrauded investors in connection with its 2019 merger with a special purpose acquisition company ("SPAC") by claiming it had millions of subscribers when, in fact, it did not have any subscribers. In connection with the merger, the SPAC filed its registration with the SEC on Form F-4 and included an audit report from the company's audit firm. In bringing a separate enforcement action against the company's foreign auditors, the SEC made clear that even where professionals are unaware of a company's alleged fraud: "[It] will continue holding gatekeepers accountable, especially those whose professional failings allow financial frauds to enter our public markets."
Similarly, the PCAOB has initiated enforcement actions against auditors of FPIs. For example, Chinese audit firm Shandong Haoxin Certified Public Accountants Co., Ltd. and four of its employees were sanctioned by the PCAOB for, among other things, issuing a false audit report for a Beijing based company client and providing false information and testimony to the PCAOB. The PCAOB specifically alleged that even though the auditors knew its client had terminated a previous auditor for raising concerns about the veracity of the company's financial statements and was hired to replace an auditor who withdrew after the company refused to provide information necessary to complete its audit procedures, it relied on the predecessor auditor's incomplete work papers and issued an audit report one day after it was engaged.
While the broader implications of this new Task Force remain to be seen, there is no doubt the SEC and DOJ will direct its enforcement resources to investigate foreign companies and gatekeepers involved in alleged transnational frauds that harm U.S. investors. FPIs should review and strengthen their disclosure and accounting controls and monitor any new disclosure guidance and rule changes by the SEC.5 Similarly, auditors, underwriters, and other professionals who help FPI's and foreign actors access U.S. markets should review, and where appropriate, enhance their due diligence, client acceptance, and other compliance procedures for existing and new clients which operate in high-risk jurisdictions and ensure adequate documentation is maintained. Such actions are essential given the U.S. government's stated and evolving cross-border enforcement priorities.
Foley & Lardner LLP's ("Foley") Securities Enforcement & Litigation ("SEL") and Government Enforcement Defense and Investigations ("GEDI") practice groups work together to offer industry-leading experience and world-class capabilities when handling matters faced by public and private companies and their officers and directors as well as by their outside auditors, underwriters, and other professionals, with urgent, multidimensional, and multijurisdictional needs. Our SEL and GEDI teams feature a diverse group of skilled legal professionals, including former SEC and PCAOB enforcement attorneys, federal prosecutors, and senior inhouse lawyers, who manage government enforcement actions, internal investigations, and related civil litigations effectively and efficiently. Foley also has decades of experience defending accounting firms in their most critical matters. Our auditor defense practice covers all federal and state regulatory regimes governing auditors and extends internationally to almost every continent. Additionally, these practice groups are comprised of lawyers proficient in multiple foreign languages, including Spanish.
Footnotes
1. Jay Clayton, Wes Bricker, and William Duhnke III, Statement on the Vital Role of Audit Quality and Regulatory Access to Audit and Other Information Internationally—Discussion of Current Information Access Challenges with Respect to U.S.-listed Companies with Significant Operations in China, U.S. Securities and Exchange Commission (Dec. 7, 2018), https://www.sec.gov/newsroom/speeches-statements/statement-vital-role-audit-quality-regulatory-access-audit-other-information-internationally.
2. Gurbir Grewal, Testimony on "Oversight of the SEC's Division of Enforcement" Before the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, U.S. Securities and Exchange Commission (Jul. 21, 2022), https://www.sec.gov/newsroom/speeches-statements/grewal-statement-house-testimony-071922.
3. Gary Gensler, "This Law and Its Effective Administration": Remarks Before the Practising Law Institute's 54th Annual Institute on Securities Regulation, U.S. Securities and Exchange Commission (Nov. 2, 2022), https://www.sec.gov/newsroom/speeches-statements/gensler-remarks-practising-law-institute-110222.
4. Jay Clayton, Wes Bricker, and William Duhnke III, Statement on the Vital Role of Audit Quality and Regulatory Access to Audit and Other Information Internationally—Discussion of Current Information Access Challenges with Respect to U.S.-listed Companies with Significant Operations in China, U.S. Securities and Exchange Commission (Dec. 7, 2018), https://www.sec.gov/newsroom/speeches-statements/statement-vital-role-audit-quality-regulatory-access-audit-other-information-internationally.
5. For example, in June 2025, the SEC issued a concept release soliciting public comment on whether the definition of foreign private issuer should be amended to increase the requirements of FPIs and thereby protect U.S. investors. See https://www.sec.gov/newsroom/press-releases/2025-82-sec-solicits-public-comment-foreign-private-issuer-definition.
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