Executive Summary
What is new: The Securities and Exchange Commission (SEC) has announced the formation of a Cross-Border Task Force within its Division of Enforcement to intensify efforts to detect and combat cross-border securities fraud, with an initial focus on foreign-based companies and market gatekeepers such as auditors and underwriters.
Why it matters: The new task force signals increased scrutiny of foreign companies accessing U.S. capital markets and the intermediaries that facilitate their entry, particularly in jurisdictions where unique risks to investors are present, such as China. The SEC’s initiative is intended to consolidate enforcement resources and deploy all available tools to address transnational fraud schemes that may harm U.S. investors.
What to do next: Foreign issuers, auditors, underwriters, and other market participants should review their compliance, disclosure, and due diligence protocols in anticipation of heightened enforcement activity and potential new disclosure guidance or rulemaking.
SEC Announces Cross-Border Task Force
On September 5, 2025, the SEC announced the creation of a Cross-Border Task Force to enhance the Division of Enforcement’s ability to identify and address cross-border securities fraud. The task force will focus on investigating violations of U.S. federal securities laws involving foreign-based companies, with particular attention to market manipulation schemes such as “pump-and-dump” and “ramp-and-dump” activities.
The task force will also direct enforcement efforts toward gatekeepers—including auditors and underwriters—who play a critical role in enabling foreign companies to access U.S. capital markets. The SEC emphasized that it welcomes international companies but will not tolerate actors who attempt to evade U.S. investor protections by exploiting international borders.
Focus on High-Risk Jurisdictions
A key priority for the task force will be companies from jurisdictions where governmental control and other factors present unique risks to U.S. investors. The SEC specifically identified China as an example of such a jurisdiction. The agency’s approach reflects a broader commitment to protecting U.S. investors from risks associated with foreign issuers and complex cross-border structures.
Potential for Additional Regulatory Action
In conjunction with the formation of the task force, SEC Chairman Paul S. Atkins has directed staff across several SEC divisions and offices—including Corporation Finance, Examinations, Economic and Risk Analysis, Trading and Markets, and the Office of International Affairs—to consider and recommend further measures to protect investors. These may include new disclosure guidance and potential rule changes.
Recommendations and Next Steps
Foreign issuers and market gatekeepers should consider the following actions in light of the SEC’s announcement:
- Review and strengthen compliance and disclosure controls to ensure accuracy and transparency in SEC filings and public communications.
- Assess and enhance due diligence protocols, particularly for transactions involving high-risk jurisdictions.
- Monitor for forthcoming SEC guidance or rulemaking that may impact disclosure obligations or market access requirements.
The SEC’s formation of the Cross-Border Task Force underscores the agency’s commitment to robust enforcement in the cross-border context and signals a period of increased regulatory scrutiny for foreign issuers and their advisers.
This client alert is for informational purposes only and does not constitute legal advice.