Last week, the SEC announced the creation of a Division of Enforcement task force focused on identifying and combating cross-border fraud harming U.S. investors. The press release says the task force will focus on investigating:

– U.S. federal securities law violations related to foreign-based companies (e.g., “pump-and-dump” and “ramp-and-dump” schemes)

– Violations related to companies from foreign jurisdictions where governmental control and other factors pose unique investor risks (e.g., China)

– Gatekeepers that help these companies access the U.S. capital markets (e.g., auditors and underwriters)

Cross-border fraud isn’t solely an area of focus for the Division of Enforcement. Chairman Atkins states: “I have also directed the staff in other SEC 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 other actions that would better protect U.S. investors, including new disclosure guidance and any necessary rule changes.”

This Quinn Emanuel alert says, “This isn’t just bureaucratic noise. It’s the first big enforcement signal from Chairman Paul Atkins since he took over in April. After months of staying tight-lipped on enforcement priorities, Atkins is now making it clear: old-school fraud is back in the SEC’s sights, and the agency’s going global.”

– Meredith Ervine