Targeting foreign fraud: SEC forms cross-border task force

February 2026  |  FEATURE | FRAUD & CORRUPTION

Financier Worldwide Magazine

February 2026 Issue

Protecting investors and markets from misconduct is the primary function of the US Securities and Exchange Commission (SEC) – a task its Division of Enforcement performs through civil court filings and administrative proceedings.

As levels of market misconduct intensify, particularly of the cross-border variety, so too do SEC remedial efforts. A recent, high-profile addition to these efforts is the agency’s Cross-Border Task Force to Combat Fraud – an initiative designed to strengthen and enhance efforts to identify and combat cross-border fraud harming US investors.

“We welcome companies from around the world seeking access to the US capital markets,” said Paul S. Atkins, chairman of the SEC. “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.”

Margaret A. Ryan, director of the Division of Enforcement at the SEC, stated that the task force will leverage the division’s resources and expertise to combat international market manipulation and fraud. “We are pleased to be part of this critical effort to enforce the federal securities laws and protect US investors,” she added.

Unpacking the task force

While the task force will continue to pursue traditional alleged securities law violations such as market manipulation and insider trading, its expanded scope pays particular attention to companies in jurisdictions perceived as posing higher regulatory risks.

According to the SEC’s formal introduction of the task force, the initiative will initially focus on investigating potential US federal securities law violations related to foreign-based companies, including market manipulation schemes such as ‘pump and dump’ and ‘ramp and dump’.

Specifically, the task force will concentrate enforcement efforts on gatekeepers – particularly auditors and underwriters – that help these companies access US capital markets. It will also examine potential securities law violations involving companies from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks.

“The SEC task force reflects a growing recognition of investor harm stemming from foreign-based issuers and intermediaries accessing US markets,” says Himamauli Das, senior managing director and counsel at K2 Integrity. “Its launch signals a need to address broader market-manipulation schemes linked to foreign companies and reinforces a simple principle: investor protection applies regardless of geography.”

Strategic pivot

While the intent of the task force is to send a strong message to foreign-based companies accessing US capital markets that misconduct will not be tolerated, the initiative – in the view of Richard Hills, senior managing director at K2 Integrity – is less a radical overhaul of SEC enforcement priorities and more of a strategic pivot.

“While the focus on foreign-based companies and schemes like ‘pump and dump’ is overdue, the real shift is the scrutiny of gatekeepers, especially auditors,” observes Mr Hills. “These firms are not just service providers; they are the first line of defence in protecting investors.

“When auditors fail to challenge questionable disclosures or overlook governance risks, particularly in opaque jurisdictions like China, they become enablers,” he continues. “Accountability here is not optional; it is foundational to restoring trust in cross-border listings.”

In summary, the task force’s key areas of focus are: (i) tackling cross-border market manipulation by issuers from foreign jurisdictions where governmental control and other factors pose unique investor risks; (ii) elevating scrutiny of gatekeepers such as auditors and underwriters; and (iii) enforcing stronger transparency and governance standards for foreign issuers from higher-risk jurisdictions.

For Mr Das, the message is clear: “US market access comes with US expectations, and operating offshore does not provide immunity from investor-protection laws.”

Outcomes, not optics

With a long history of forming task forces to pursue broad administration imperatives, the SEC’s Cross-Border Task Force to Combat Fraud is the latest incarnation of the current administration’s America First Investment Policy, targeting foreign actors and prioritising enforcement against cross-border fraud.

“The task force is likely to expand through deeper collaboration across SEC divisions, stronger coordination with foreign regulators and greater use of data analytics to detect misconduct earlier,” suggests Mr Das. “We also expect broader oversight of gatekeepers, multijurisdictional cases and sustained investment in the SEC’s global enforcement capacity.”

Illustrating the desire for collaboration, the SEC has directed staff in other divisions and offices – including the Divisions of Corporation Finance, Examinations, Economic and Risk Analysis, and Trading and Markets, as well as the Office of International Affairs – to consider and recommend actions that would better protect US investors, including new disclosure guidance and any necessary rule changes.

According to Mr Hills, the success of such efforts should be judged by outcomes, not optics. “We need reduced volatility tied to fraud events and improved investor protection,” he contends. “The task force does not appear to be a temporary initiative, but a signalled shift toward a lasting cross-border enforcement model. If it helps restore confidence in US markets while keeping global access open, it is doing its job.”

The creation of the Cross-Border Task Force signals a decisive step toward a more resilient global financial ecosystem. By sharpening its focus on accountability and transparency, the SEC is not merely reacting to misconduct – it is reshaping the rules of engagement for companies seeking access to US markets.

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Fraser Tennant