The US Securities and Exchange Commission (SEC) is looking for new ways to combat transnational securities fraud targeting US investors. As part of that effort, this month the SEC announced a new Cross-Border Task Force designed to “strengthen and enhance” enforcement of securities laws in connection with foreign-based companies, including efforts to combat cross-border potential market manipulation and fraud.
According to the SEC’s press release, the Cross-Border Task Force will first focus its enforcement efforts on several key areas, including violations by gatekeepers, especially auditors and underwriters, who help foreign-based companies access the US capital markets. Another early focus will include securities law violations by foreign issuers from countries like China or other countries where government control, or other circumstances pose greater risk to investors.
SEC Chairman Paul S. Atkins said, “We welcome companies from around the world seeking access to the U.S. 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.”
According to the announcement, Chairman Atkins directed the staff of SEC divisions and offices, including the Divisions of Corporation Finance, Examinations, Economic and Risk Analysis, and Trading and Markets, and the Office of International Affairs, to consider and recommend other actions that would better protect US investors, including new disclosure guidance and any necessary rule changes.
“The Cross-Border Task Force will leverage the Division of Enforcement’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,” said the SEC’s Division of Enforcement Director Margaret A. Ryan.
Securities fraud from transnational corporations can be hard to detect. That is why whistleblowers with inside knowledge can be especially helpful in detecting and reporting transnational securities fraud.
Eligible SEC whistleblowers may receive a financial reward of between 10% and 30% of the amount collected if the SEC orders more than $1 million in sanctions as a result of the whistleblower’s information. Recoveries in related cases by other agencies may also be counted toward a whistleblower’s award.
Phillips & Cohen has extensive experience representing whistleblowers from all over the world in reporting securities fraud to the SEC. If you believe you know of securities fraud involving a foreign-based entity or transnational transaction and would like to speak to an experienced whistleblower attorney, contact Phillips & Cohen for a free, confidential review of your case.