SEC Forms Cross-Border Task Force with Implications for Foreign Issuers, Auditors and Other Gatekeepers

On September 5, 2025, the U.S. Securities and Exchange Commission (SEC) announced the creation of a Cross-Border Task Force designed to enhance the Enforcement Division’s efforts to combat fraud involving foreign companies. The announcement is the first statement from the SEC regarding enforcement priorities since the appointment of Judge Margaret Ryan as the agency’s Director of Enforcement on August 21, 2025. The Task Force’s initial focus will be on foreign-based market manipulation that harms U.S. investors, such as pump-and-dump and ramp-and-dump schemes. The announcement specifically mentions China-based companies and warns of increased scrutiny for gatekeepers who assist foreign issuers, such as auditors and underwriters. The Task Force’s explicit focus on foreign companies and individuals is also consistent with the Trump administration’s “America First” approach to protecting U.S. markets and interests more broadly, including under the Foreign Corrupt Practices Act.¹   

Key Points

The announcement follows reports of billions in investor losses tied to Nasdaq-listed Chinese stocks promoted on social media² and new listing standards recently proposed by Nasdaq to address those risks. The proposed Nasdaq standards include:

• A $15 million minimum market value of public float for new listings under the net income standard.
• An accelerated suspension and delisting process for companies with a listing deficiency and a market value of below $5 million.
• A $25 million minimum public offering proceeds requirement for new listings of companies principally operating in China.

If approved by the SEC, these standards will make it more difficult for smaller companies to issue and maintain publicly listed shares in the U.S., particularly those with operations in China.

Market manipulation cases against foreign issuers are unusual, and the stated focus on gatekeepers may be a nod to difficulties investigating in jurisdictions that, like China, restrict U.S. regulators’ access to witnesses and data. An investigative “sweep” of domestic auditors and underwriters with connections to foreign issuers is a likely starting point for the Task Force and may be underway.     

According to the SEC’s announcement, Chairman Paul S. Atkins has directed the SEC’s offices and divisions, including the Divisions of Corporation Finance and Trading and Markets, to recommend steps to help protect investors from cross-border misconduct. This may lead to updated guidance on disclosures for foreign issuers and new rulemaking with foreign issuers in mind.

The Task Force may also look for opportunities to investigate in parallel with the U.S. Department of Justice (DOJ), which announced charges on September 12 against the co-CEO of a Chinese company for operating a social media-driven pump-and-dump scheme that allegedly generated over $100 million in profits.³ Both the Federal Bureau of Investigation and the SEC’s Office of the Inspector General investigated the case.

The creation of the Task Force complements other actions taken by the SEC and a focus by certain members of Congress. This summer, the SEC issued for public comment a concept release around the disclosure and filing requirements for foreign private issuers, suggesting that the SEC was interested in leveling the playing field for U.S.-based issuers. As to Congress, certain members have pushed for more scrutiny of China-based companies by the SEC and of China-based auditors by the Public Company Accounting Oversight Board.⁴ As a result, issuers and accounting firms may experience more pushback from regulators about their China-based firms’ efforts to protect sensitive information from disclosure as required by Chinese laws.

Implications for Market Participants

Auditors, underwriters and other professionals who represent foreign issuers should prepare themselves for SEC inquiries and consider a review of existing issuer relationships, including for suspicious social media activity and unusual trading. A review of intake procedures with a focus on ownership or control by foreign governments may be advisable, as the SEC’s announcement identifies “governmental control” as a specific risk.

Foreign issuers should ensure full and transparent risk disclosures regarding ownership, governmental influence and trading volatility, and monitor both SEC rulemaking and the implications of Nasdaq’s proposal on listed securities. It should be assumed that questions around the adequacy of disclosures and accounting arising from filing reviews by the SEC’s Division of Corporation Finance will more likely result in referrals to SEC enforcement and that concerns around potential market manipulation identified in SEC exams will be more prone to referral to SEC enforcement. Issuers that experience market volatility or that have an active social media presence may be at increased risk of trading suspensions or delistings.

Bottom Line

The SEC’s Cross-Border Task Force, Nasdaq’s proposed listing changes and recent action from the DOJ represent a concerted regulatory response to a reported surge in cross-border fraud and market manipulation.

Issuers, auditors, underwriters, legal professionals and other market participants should expect increased regulatory scrutiny and higher barriers to entry for foreign issuers, particularly companies from China and other high-risk jurisdictions.

^{1 Memorandum, Head of Criminal Division, “Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA)” (June 9, 2025), available at https://www.justice.gov/dag/media/1403031/dl.}

^{2 Crypto Briefing Article, “SEC targets US firms linked to suspected Chinese pump and dump scams” (Sept. 10, 2025), available at https://cryptobriefing.com/sec-chinese-pump-dump-crackdown/ (citing Financial Times, “SEC targets US firms tied to suspected Chinese ‘pump and dump’ scams” (Sept. 9, 2025)).}

^{3 Press Release, “DOJ Announces Indictments of Co-CEO of Chinese Publicly Traded Technology Company and Financial Advisor for over $100M Securities Fraud Scheme” (Sept. 12, 2025), available at https://www.justice.gov/usao-edva/pr/co-ceo-chinese-publicly-traded-technology-company-and-financial-advisor-indicted-over.}

^{4 Press Release, “Moolenaar, Scott Demand Answers from SEC and PCAOB on Chinese Companies’ Access to U.S. Markets” (July 16, 2025), available at https://selectcommitteeontheccp.house.gov/media/press-releases/moolenaar-scott-demand-answers-from-sec-and-pcaob-on-chinese-companies-access-to-us-markets.}