What happened?
The United States Securities and Exchange Commission (SEC) has announced the formation of a Cross-Border Task Force. This body will focus on investigating and mitigating foreign-based fraud schemes, including market manipulation and fraudulent trading practices such as “pump-and-dump” and “ramp-and-dump”. The SEC intends to enhance its enforcement measures against those facilitating these illicit activities, referred to as “gatekeepers”.
Who does this affect?
This development primarily affects entities outside the U.S. that are involved in market manipulation and fraudulent trading schemes. It also impacts underwriters, auditors and other intermediaries assisting these organizations in accessing U.S. capital markets. Moreover, companies from around the world seeking access to the U.S. capital markets must adhere to U.S. investor protections and securities law.
Why does this matter?
The formation of the Cross-Border Task Force is significant because it implies stricter regulation and enhanced efforts to combat cross-border financial fraud. This could potentially lead to cleaner and more secure capital markets for investors. Not only does this task force work towards curbing fraudulent activities but also underscores the need for foreign entities to comply with all US investor protections and securities laws when entering its capital markets.