The US Securities and Exchange Commission (SEC) announced the formation of a cross-border task force that will strengthen and enhance the Division of Enforcement’s efforts to identify and combat fraud harming US investors.
The Cross-Border Task Force will focus initially on investigating potential US federal securities law violations related to foreign-based companies, including potential market manipulation, such as “pump-and-dump” and “ramp-and-dump” schemes. The task force also will focus enforcement efforts on gatekeepers, particularly auditors and underwriters, which help these companies access the US capital markets. In addition, it will examine potential securities law violations related to companies from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks.
SEC chair Paul Atkins said in a statement: “We welcome companies from around the world seeking access to the US capital markets but we will not tolerate bad actors – whether companies, intermediaries, gatekeepers or exploitative traders – that attempt to use international borders to frustrate and avoid US investor protections. This new task force will consolidate SEC investigative efforts and allow the SEC to use every available tool to combat transnational fraud.”
In a separate joint statement, the US Commodity Futures Trading Commission (CFTC) and SEC signaled greater “regulatory harmonization opportunities”.
SEC chair Paul Atkins and CFTC acting chair Caroline Pham said in the statement: “By working in lockstep, our two agencies can harness our nation’s unique regulatory structure into a source of strength for market participants, investors and all Americans…To the extent possible and appropriate in the public interest under existing statutes, our respective agencies should consider harmonizing product and venue definitions; streamlining reporting and data standards; aligning capital and margin frameworks; and standing up coordinated innovation exemptions using each agency’s existing exemptive authority.”