SEC launches working group to prevent fraud against investors
The SEC is working to combat cross-border fraud against U.S. investors.
A new cross-border working group announced by the Securities and Exchange Commission on Monday (September 8) will initially focus on investigating possible securities law violations related to overseas companies, including markets such as “pumps and dumps.”
“We welcome companies from around the world to seek access to the U.S. capital markets,” SEC Chairman Paul S. Atkins said. “However, we will not tolerate bad actors, whether companies, intermediaries, gatekeepers or exploitative traders, trying to use international borders to frustrate and avoid protection from U.S. investors.”
The SEC said the task force will also focus on “gatekeepers” such as auditors and underwriters who can help companies enter the capital market and will also look at potential violations with companies such as foreign jurisdictions such as China, such as foreign jurisdictions such as China. “Government controls and other factors pose unique investor risks,” the SEC said.
Atkins added that he has directed staff from various departments of the committee to propose other actions to protect investors, such as new disclosure guidance or any necessary rule changes.
The news comes after last week's news that the SEC and the Commodity Futures Trading Commission (CFTC) want to coordinate their regulations to provide greater clarity and strengthen U.S. capital markets. The two agencies plan to hold a joint roundtable later this month to discuss their regulatory coordination priorities.
Atkins and CFTC Acting Chairman Caroline D. “By working at Lockstep, our two institutions can leverage our country’s unique regulatory structure as a source of strength for market participants, investors and all Americans.”
In other financial regulations news, the Ministry of Finance’s Financial Crime Enforcement Network (FINCEN) released guidance last week to encourage appropriate, voluntary cross-border information sharing between financial institutions and including appropriate foreign institutions.
Fincen said the information sharing could help financial institutions fight money laundering, terrorist financing and illegal financial activities involving drug trafficking organizations, foreign terrorist organizations and fraudsters.
“While financial institutions are prohibited from sharing Suspicious Activity Reports (SARSs) and information that will reveal the existence of SARs, the Bank Secrecy Act and its implementation regulations generally do not prohibit cross-border information sharing,” the regulator said in a press release.
