by Jina L. Choi, Gabriela Li, David Woodcock, and Emily Rumble
From left to proper: Jina L. Choi, Gabriela Li, David Woodcock, and Emily Rumble (photographs courtesy of Gibson, Dunn & Crutcher LLP)
In step with the Trump Administration’s America First Funding Coverage and maybe in response to entreaties from Congress and state regulators to guard the U.S. capital markets from unscrupulous international actors, the SEC introduced the formation of a Cross-Border Activity Pressure inside its Division of Enforcement on September 5, 2025.[1] The duty pressure will give attention to investigating foreign-based issuers for potential market manipulation, similar to pump-and-dump and ramp-and-dump schemes, and can enhance scrutiny of gatekeepers, significantly auditors and underwriters, who assist international issuers entry the U.S. capital markets. The assertion notably singles out China as a jurisdiction the place governmental management and different components pose distinctive investor dangers.
The creation of a particular job pressure aligns with the present administration’s America First Funding Coverage memorandum issued on February 21, 2025, which indicators an intention to additional decouple from China.[2] The memorandum proposes reshaping inbound and outbound funding screening to ease funding with U.S. allies whereas making funding into or by China and different international nations tougher.[3] It additionally previews guidelines to limit Chinese language funding in key U.S. industries and to discourage U.S. funding in sectors that help China’s army trade. Responding to the decision, the DOJ fashioned a Commerce Fraud Activity Pressure final month to analyze and prosecute duty-evasion schemes and illegal importation of prohibited items, specializing in worldwide commerce with international corporations.[4]
Fueled by tightened itemizing guidelines in China, extra Chinese language corporations are in search of U.S. listings within the U.S.[5] In keeping with analysis by the U.S.-China Financial and Safety Evaluation Fee, as of March 7, 2025, there have been 286 Chinese language corporations listed on the NYSE, NASDAQ and NYSE American (previously often called the American Inventory Change) with a complete market capitalization of $1.1 trillion.[6] That represents a 30% development in market cap from the prior yr.[7] A lot of Chinese language corporations lately went public by means of particular function acquisition corporations (SPACs).[8] This echoes the reverse-merger wave a decade in the past—when about one-third of U.S. reverse mergers concerned China working corporations.[9] And, beginning in 2011, the SEC responded to the related dangers by suspending, deregistering, and bringing fraud expenses towards corporations that had accomplished such mergers.[10]
The SEC’s Cross-Border Activity Pressure follows a gentle drumbeat of strain on Chairman Atkins to tighten oversight and delist China-based issuers. At his Senate affirmation listening to, a number of senators, from each side of the aisle, identified the chance of Chinese language corporations accessing the U.S. capital markets and highlighted Chinese language corporations “taking part in by a complete completely different algorithm, which each put them at a aggressive benefit, but additionally endangered American traders on these exchanges.”[11]
On Could 2, 2025, Rep. John Moolenaar (R-Mich.), chair of the Home Choose Committee on the Strategic Competitors Between the USA and the Chinese language Communist Occasion, and Sen. Rick Scott (R-Fla.), chair of the Senate Committee on Growing old, along with different lawmakers, urged Chairman Atkins to make use of present authorities to guard U.S. markets and traders in a letter, citing giant Chinese language issuers with lots of of billions of {dollars} in market cap whose securities commerce on U.S. exchanges and alleging they profit from U.S. capital whereas advancing goals of the Chinese language Communist Occasion (CCP), together with army modernization and human rights abuses.[12] A number of weeks later, on Could 19, 2025, Sen. Todd Younger (R-Ind.) pressed Chairman Atkins in a letter to tighten oversight of China-related U.S. listings.[13] On Could 20, 2025, state monetary officers wrote to Chairman Atkins urging investigations into delisting China-based issuers.[14] The letter asserts that Chinese language authorities actions foster opacity inconsistent with the Change Act’s reporting and anti-fraud necessities.
On September 18, 2025 in printed Remarks on the Investor Advisory Committee Assembly, Chairman Atkins signaled that the Fee could tighten the particular lodging accessible to international personal issuers.[15] He pointed to the SEC’s June 2025 idea launch in search of public suggestions on including eligibility situations, such at the least degree of international buying and selling quantity or a major itemizing on a significant international alternate, earlier than non-U.S. corporations can depend on lodging not afforded to home issuers.[16] Chairman Atkins framed the evaluate as a response to market shifts by which many international corporations are included in jurisdictions, e.g., the Cayman Islands, completely different from the place they’re headquartered and function, elevating governance concerns with implications for shareholder pursuits.
The SEC’s creation of a Cross-Border Activity Pressure is in step with its longstanding follow of forming particular job pressure groups to pay attention nationwide sources on precedence enforcement areas. In 2013, underneath Chair Mary Jo White, the SEC’s Enforcement Division launched the Monetary Reporting and Audit Activity Pressure (FRAud) to enhance detection and prevention of monetary reporting and accounting fraud,[17] in addition to the Microcap Activity Pressure to analyze microcap securities fraud and maintain gatekeepers accountable.[18] In 2017, reflecting Chairman Jay Clayton’s “Important Avenue” focus, the SEC fashioned the Retail Technique Activity Pressure to establish misconduct concentrating on retail traders.[19] And from 2021 by means of 2024, a Local weather & ESG Activity Pressure, introduced by Appearing Chair Allison Herren Lee and continued underneath Chair Gary Gensler, heightened scrutiny of local weather threat disclosures and underscored the SEC’s prioritization of ESG initiatives.[20]
With its announcement of the Cross-Border Activity Pressure, Chairman Atkins famous that “[w]e welcome corporations from all over the world in search of entry to the U.S. capital markets … [b]ut we is not going to tolerate unhealthy actors … the brand new job pressure will consolidate SEC investigative efforts and permit the SEC to make use of each accessible software to fight transnational fraud.” He additionally famous a Fee-wide method to defending U.S. traders, together with directing workers within the Divisions of Company Finance, Examinations, Financial and Danger Evaluation and Buying and selling and Markets in addition to the Workplace of Worldwide Affairs to think about and suggest new disclosure steering and any essential rule adjustments.
Firms with ties to China ought to anticipate continued, and probably heightened, SEC enforcement in conventional areas inside the SEC’s experience. After years of investigating FCPA violations, off-shore market manipulations, worldwide insider buying and selling rings and accounting fraud at Chinese language corporations, the enforcement workers has deep expertise and is well-poised to execute on its new mission of combatting cross-border funding fraud.
To some extent, previous is prologue and up to date enforcement actions involving Chinese language corporations provide a transparent preview of enforcement on this area and should function templates for the Cross- Border Activity Pressure because it initiates and advances future investigations.
Market Manipulation
Market manipulation, together with pump-and-dump and ramp-and-dump schemes, has been a conventional SEC enforcement space. On September 12, 2025—only a week after the announcement of the SEC’s Activity Pressure—the Justice Division introduced an indictment, within the Jap District of Virginia towards the co-CEO of a NASDAQ-listed Cayman islands expertise firm with its principal operations in China and a monetary advisor alleging a $110 million pump-and-dump scheme.[21] In keeping with the indictment, defendants allegedly funneled tens of thousands and thousands of shares of the corporate to fifteen co-conspirators by means of non-bona fide transactions after which launched a coordinated social-media marketing campaign to inflate the value and buying and selling quantity earlier than dumping the shares, producing over $110 million for defendants whereas traders noticed the corporate lose greater than $950 million in market capitalization. The FBI and SEC-OIG investigated this traditional alleged market manipulation.[22]
Accounting Fraud
Accounting fraud is a constant enforcement precedence for the SEC. In a current case, on February 6, 2024, the SEC introduced a settlement for accounting fraud expenses towards a cloud communications supplier, included within the Cayman Islands and headquartered in Beijing, whose American Depositary Shares traded on NYSE.[23] The SEC alleged that two senior managers orchestrated a fraudulent scheme by prematurely recognizing income on service contracts earlier than the Firm had completed the work. Consequently, the corporate overstated income for 2 quarters and was charged with violations of the antifraud, reporting, books-and- data, and inner controls provisions of the federal securities legal guidelines.
Chinese language Auditors
One other notable space of enforcement includes Chinese language auditors. In 2020, the Holding Overseas Firms Accountable Act (HFCAA) was enacted into legislation after China prevented the Public Firm Accounting Oversight Board (PCAOB) from inspecting China-based audit corporations who audit Chinese language corporations listed on U.S. exchanges.[24] Underneath the HFCAA, if the PCAOB states it can not examine an audit agency in a jurisdiction, the SEC should establish affected issuers and, after two consecutive years, ban buying and selling of their securities within the U.S. Though the PCAOB introduced in 2022 that it had full entry to audit corporations in mainland China and Hong Kong,[25] corporations in these areas stay topic to PCAOB examinations and associated SEC enforcement actions.
Whereas it doesn’t immediately implement the HFCAA, the SEC has assisted the PCAOB in disciplining Chinese language auditors because the difficulty arose and it has introduced its personal enforcement actions towards Chinese language auditors.[26]
Dealer-Sellers
There was current enforcement exercise towards dealer sellers with China ties or with international clients conducting buying and selling in international issuers for deficiency in SARs filings.
On November 22, 2024, the SEC introduced settled expenses towards a broker-dealer based by a Chinese language nationwide and with important China-related possession for submitting poor Suspicious Exercise Studies (SARs) that omitted required particulars explaining the allegedly suspicious conduct as required by FinCEN.[27] As an illustration, when a foreign-based shopper making important earnings and dealing with account restrictions because of a “excessive chance” of insider buying and selling, the SAR omitted the timeframe, the securities concerned, and different fundamental commerce particulars and rationale.[28]
On December 17, 2024, the SEC introduced one other set of settled expenses towards an internet low cost dealer and its former AML Compliance Officer for failing to file required SARs in violation of Change Act Part 17(a) and Rule 17a-8.[29] The SEC alleged that the corporate’s hundreds of largely retail clients, lots of whom have been primarily based in China, Malaysia, or Taiwan, routinely engaged in probably suspicious conduct, however that deficiencies within the firm’s AML program led to repeated failures to analyze and report.[30] The order additionally alleges that the AML officer repeatedly declined to analyze or file SARs even when alerted by inner surveillance or the clearing agency, and at occasions tipped clients to maintain buying and selling beneath average- daily-volume thresholds to keep away from evaluate. With out admitting or denying the findings, the corporate agreed to a $125,000 penalty, and the officer agreed to a $25,000 penalty.
Insider Buying and selling
The SEC has additionally introduced important insider buying and selling enforcement actions towards Chinese language merchants in advanced, high-profile insider buying and selling instances. Notably, the SEC’s Market Abuse Unit and Evaluation and Detection Middle have used superior information analytics to identify misconduct by offshore merchants, which is able to seemingly be key to the Cross-Border Activity Pressure’s agency-wide experience.
For instance, on August 16, 2024, the SEC obtained a closing judgment towards a Chinese language nationwide who was a accomplice of a Hong Kong-based personal fairness agency who allegedly engaged in huge buying and selling within the accounts of 5 Chinese language nationals, together with his aged dad and mom, amassing over $56 million of DreamWorks inventory earlier than its acquisition by Comcast. The courtroom granted the SEC’s request for an asset freeze and in the end imposed a $39.5 million civil penalty to be paid from funds frozen in brokerage accounts he allegedly used for insider buying and selling.[31]
In one other important case, the SEC charged the Chinese language CEO and Chief Know-how Officer of a Cayman Islands-incorporated, Beijing-based cell web firm whose securities traded on the NYSE with insider buying and selling in addition to allegedly making deceptive materials statements concerning the firm’s income.[32] The case is notable since along with charging c-suite executives with insider buying and selling in shares of their very own firm, the SEC charged the officers for trades that have been purportedly made pursuant to Rule 10b5-1 buying and selling plans, that are broadly utilized by public firm officers and administrators since trades pursuant to such plans can protect insiders from insider buying and selling legal responsibility underneath sure circumstances.
The Hong Kong Securities and Futures Fee (SFC) has additionally introduced plans to amend the Hong Kong Securities and Futures Ordinance (SFO) to offer it with higher powers to analyze and prosecute cross-border insider buying and selling.[33] Whereas the SFC already has powers to prosecute market misconduct (similar to value rigging and creating the looks of false buying and selling) happening in Hong Kong in relation to abroad listed securities, the SFC’s powers in relation to insider dealing are at the moment restricted to insider dealing happening in Hong Kong in relation to Hong Kong listed securities or their derivatives, in addition to securities dual-listed in Hong Kong and one other jurisdiction. These limitations on the SFC’s powers have traditionally meant that the SFC couldn’t convey motion immediately towards people in Hong Kong who have interaction in insider dealing in relation to overseas-listed securities, and was as a substitute restricted to aiding international regulators such because the SEC with their investigations.
We anticipate an uptick in insider dealing investigations in Hong Kong by the SFC in relation to U.S.-listed securities particularly as soon as the SFC acquires these powers to immediately prosecute this kind of misconduct. It will seemingly result in elevated collaboration by the SFC with the SEC (together with with the Cross-Border Activity Pressure) in relation to cross-border insider dealing investigations involving Hong Kong residents and/or Hong Kong licensed corporations buying and selling in US- listed securities.
The SEC’s new Cross-Border Activity Pressure and up to date enforcement historical past sign sustained, and sure escalating, cross-border scrutiny, significantly for China and Hong Kong primarily based issuers, Chinese language auditing corporations, and corporations that work on China-related offers. These entities ought to pay shut consideration to dangers associated to public disclosure, audit agency qualification, and keep sturdy inner accounting and disclosure controls to remain compliant with SEC necessities. As well as, they need to additionally monitor enforcement actions and investigations popping out of the SEC to get a way of what could come.
[1] SEC Publicizes Formation of Cross-Border Activity Pressure to Fight Fraud. https://www.sec.gov/newsroom/press-releases/2025-113-sec-announces-formation-cross-border- task-force-combat-fraud.
[2] America First Funding Coverage. https://www.whitehouse.gov/presidential- actions/2025/02/america-first-investment-policy/.
[3] Id., § 1.
[4] See Gibson Dunn Consumer Alert, Getting Severe About Tariff Evasion—New Commerce Fraud Activity Pressure Continues Development of DOJ’s High-Down Era of Investigative Targets. https://www.gibsondunn.com/getting-serious-about-tariff-evasion-new-trade-fraud-task-force- continues-trend-of-doj-top-down-generation-of-investigative-targets/.
[5] Chinese language corporations set for report US listings, undeterred by geopolitics. https://www.reuters.com/enterprise/finance/chinese-firms-set-record-us-listings-undeterred-by- geopolitics-2025-08-05/.
[6] Chinese language Firms Listed on Main U.S. Inventory Exchanges. https://www.uscc.gov/analysis/chinese-companies-listed-major-us-stock-exchanges.
[7] Id.
[8] Supra observe 5.
[9] See PCAOB Analysis Be aware, Exercise Abstract and Audit Implications for Reverse Mergers Involving Firms from the China Area: January 1, 2007 by means of March 31, 2010, right here.
[10] See SEC Approves New Guidelines to Toughen Itemizing Requirements for Reverse Merger Firms. https://www.sec.gov/information/press/2011/2011-235.htm. See additionally Gibson Dunn 2012 Mid-Yr Securities Enforcement Replace. https://www.martindale.com/matter/asr- 1553806.Securities.pdf at p. 24-25.
[11] Affirmation Listening to Earlier than the S. Comm. on Banking, Hous., & City Affs., 119th Cong. (Mar. 27, 2025) (video at 40:46). https://www.youtube.com/watch?v=7AyzxTQZg0E. In keeping with media stories, throughout his affirmation listening to, Chairman Atkins agreed to analyze Chinese language corporations for violations of U.S. disclosure legal guidelines when requested by Sen. Rick Scott, who mentioned his affirmation vote was contingent on Chairman Atkins ramping up scrutiny on Chinese language corporations. See New York Submit article, The warmth is on for newly confirmed SEC chairman Paul Atkins to crack down on Chinese language corporations. https://nypost.com/2025/04/12/enterprise/the-heat-is- on-for-newly-confirmed-sec-chairman-paul-atkins-to-crackdown-on-chinese-companies/.
[12] Chairman Moolenaar, Chairman Scott Urge SEC to Delist CCP-Linked Firms from U.S. Markets. https://selectcommitteeontheccp.home.gov/media/press-releases/chairman-moolenaar- chairman-scott-urge-sec-delist-ccp-linked-companies-us.
[13] Younger Asks SEC Chair to Defend U.S. Financial, Nationwide Safety from Chinese language Market Manipulation. https://www.younger.senate.gov/newsroom/press-releases/young-asks-sec-chair-to- protect-u-s-economic-national-security-from-chinese-market-manipulation/.
[14] Treasurer Pack Urges U.S. Inventory Change to Delist Chinese language Firms. https://wvtreasury.gov/About/Press-Releases/particulars/treasurer-pack-urges-u-s-stock-exchange- to-delist-chinese-companies.
[15] Remarks on the Investor Advisory Committee Assembly. https://www.sec.gov/newsroom/speeches-statements/atkins-091825-remarks-investor-advisory- committee-meeting.
[16] Idea Launch on Overseas Non-public Issuer Eligibility, 90 Fed. Reg. 24,232 (June 9, 2025) (SEC), https://www.federalregister.gov/paperwork/2025/06/09/2025-10428/concept-release-on- foreign-private-issuer-eligibility.
[17] Monetary Reporting and Accounting Fraud. https://www.sec.gov/newsroom/speeches- statements/spch091913ac.
[18] SEC Publicizes Enforcement Initiatives to Fight Monetary Reporting and Microcap Fraud and Improve Danger Evaluation. https://www.sec.gov/newsroom/press-releases/2013-2013-121htm.
[19] SEC Publicizes Enforcement Initiatives to Fight Cyber-Primarily based Threats and Defend Retail Buyers. https://www.sec.gov/newsroom/press-releases/2017-176.
[20] SEC Publicizes Enforcement Activity Pressure Targeted on Local weather and ESG Points. https://www.sec.gov/newsroom/press-releases/2021-42.
[21] Co-CEO of Chinese language Publicly Traded Know-how Firm and Monetary Advisor Indicted for Over $100M Securities Fraud Scheme. https://www.justice.gov/opa/pr/co-ceo-chinese-publicly- traded-technology-company-and-financial-advisor-indicted-over-100m.
[22] These kinds of market manipulations are bread-and-butter instances the SEC has introduced over time, together with towards merchants primarily based in China. See, e.g., SEC Fees 18 Merchants in $31 Million Inventory Manipulation Scheme. https://www.sec.gov/newsroom/press-releases/2019-216.
[23] SEC Fees China-Primarily based Tech Firm Cloopen Group with Accounting Fraud. https://www.sec.gov/newsroom/press-releases/2024-15.
[24] Holding Overseas Firms Accountable Act. https://www.sec.gov/rules-regulations/holding- foreign-companies-accountable-act.
[25] PCAOB Secures Full Entry to Examine, Examine Chinese language Companies for First Time in Historical past. https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-secures- complete-access-to-inspect-investigate-chinese-firms-for-first-time-in-history.
[26] See https://www.sec.gov/newsroom/press-releases/2022-176. The PCAOB has additionally taken a number of current actions towards Chinese language and Hong Kong audit corporations. See e.g., https://pcaobus.org/news-events/news-releases/news-release-detail/fact-sheet-pcaob-imposes- historic-sanctions-on-china-based-audit-firms; https://pcaobus.org/news-events/news- releases/news-release-detail/pcaob-sanctions-three-partners-of-kpmg-china-for-violations-of- audit-standards.
[27] SEC Fees Three Dealer-Sellers with Submitting Poor Suspicious Exercise Studies. https://www.sec.gov/newsroom/press-releases/2024-185. Webull disclosed its ties to China in its Annual Report. See Webull Corp. Type 20-F for the fiscal yr ended Dec. 31, 2024 (filed Apr. 25, 2025), https://www.sec.gov/ix?doc=/Archives/edgar/information/1866364/000121390025035656/ea0235698- 20f_webull.htm.
[28] Within the Matter of Webull Monetary LLC, Change Act Launch No. 101707, Admin. Proc. File No. 3-22330 (Nov. 22, 2024). https://www.sec.gov/information/litigation/admin/2024/34-101707.pdf.
[29] SEC Fees SogoTrade Inc. and Former Anti-Cash Laundering Compliance Officer for Failure to File Suspicious Exercise Studies (SARs). https://www.sec.gov/enforcement- litigation/administrative-proceedings/34-101936-s.
[30] Within the Matter of SogoTrade, Inc., Change Act Launch No. 101936, Admin. Proc. File No. 3-22363 (Dec. 17, 2024). https://www.sec.gov/information/litigation/admin/2024/34-101936.pdf.
[31] Shaohua (Michael) Yin, et al. https://www.sec.gov/enforcement-litigation/litigation-releases/lr- 26093.
[32] SEC Fees Cheetah Cellular’s CEO and its Former President with Insider Buying and selling. https://www.sec.gov/newsroom/press-releases/2022-169.
[33] Hong Kong Securities and Futures Fee, Session Conclusions on Proposed Amendments to Enforcement-related provisions of the Securities and Futures Fee. https://apps.sfc.hk/edistributionWeb/api/session/conclusion?lang=EN&refNo=21CP3.
Jina L. Choi, David Woodcock, and Emily Rumble are Companions and Gabriela Li is an Affiliate at Gibson, Dunn & Crutcher LLP. Winston Y. Chan, Tina Samanta, Osman Nawaz, William R. Hallatt, and Mark Okay. Schonfeld are Companions at Gibson Dunn who additionally contributed to this text. This put up first appeared on the agency’s weblog.
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t signify these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College College of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this website and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility almost about infringement of mental property rights stays with the creator(s).
by Jina L. Choi, Gabriela Li, David Woodcock, and Emily Rumble
From left to proper: Jina L. Choi, Gabriela Li, David Woodcock, and Emily Rumble (photographs courtesy of Gibson, Dunn & Crutcher LLP)
In step with the Trump Administration’s America First Funding Coverage and maybe in response to entreaties from Congress and state regulators to guard the U.S. capital markets from unscrupulous international actors, the SEC introduced the formation of a Cross-Border Activity Pressure inside its Division of Enforcement on September 5, 2025.[1] The duty pressure will give attention to investigating foreign-based issuers for potential market manipulation, similar to pump-and-dump and ramp-and-dump schemes, and can enhance scrutiny of gatekeepers, significantly auditors and underwriters, who assist international issuers entry the U.S. capital markets. The assertion notably singles out China as a jurisdiction the place governmental management and different components pose distinctive investor dangers.
The creation of a particular job pressure aligns with the present administration’s America First Funding Coverage memorandum issued on February 21, 2025, which indicators an intention to additional decouple from China.[2] The memorandum proposes reshaping inbound and outbound funding screening to ease funding with U.S. allies whereas making funding into or by China and different international nations tougher.[3] It additionally previews guidelines to limit Chinese language funding in key U.S. industries and to discourage U.S. funding in sectors that help China’s army trade. Responding to the decision, the DOJ fashioned a Commerce Fraud Activity Pressure final month to analyze and prosecute duty-evasion schemes and illegal importation of prohibited items, specializing in worldwide commerce with international corporations.[4]
Fueled by tightened itemizing guidelines in China, extra Chinese language corporations are in search of U.S. listings within the U.S.[5] In keeping with analysis by the U.S.-China Financial and Safety Evaluation Fee, as of March 7, 2025, there have been 286 Chinese language corporations listed on the NYSE, NASDAQ and NYSE American (previously often called the American Inventory Change) with a complete market capitalization of $1.1 trillion.[6] That represents a 30% development in market cap from the prior yr.[7] A lot of Chinese language corporations lately went public by means of particular function acquisition corporations (SPACs).[8] This echoes the reverse-merger wave a decade in the past—when about one-third of U.S. reverse mergers concerned China working corporations.[9] And, beginning in 2011, the SEC responded to the related dangers by suspending, deregistering, and bringing fraud expenses towards corporations that had accomplished such mergers.[10]
The SEC’s Cross-Border Activity Pressure follows a gentle drumbeat of strain on Chairman Atkins to tighten oversight and delist China-based issuers. At his Senate affirmation listening to, a number of senators, from each side of the aisle, identified the chance of Chinese language corporations accessing the U.S. capital markets and highlighted Chinese language corporations “taking part in by a complete completely different algorithm, which each put them at a aggressive benefit, but additionally endangered American traders on these exchanges.”[11]
On Could 2, 2025, Rep. John Moolenaar (R-Mich.), chair of the Home Choose Committee on the Strategic Competitors Between the USA and the Chinese language Communist Occasion, and Sen. Rick Scott (R-Fla.), chair of the Senate Committee on Growing old, along with different lawmakers, urged Chairman Atkins to make use of present authorities to guard U.S. markets and traders in a letter, citing giant Chinese language issuers with lots of of billions of {dollars} in market cap whose securities commerce on U.S. exchanges and alleging they profit from U.S. capital whereas advancing goals of the Chinese language Communist Occasion (CCP), together with army modernization and human rights abuses.[12] A number of weeks later, on Could 19, 2025, Sen. Todd Younger (R-Ind.) pressed Chairman Atkins in a letter to tighten oversight of China-related U.S. listings.[13] On Could 20, 2025, state monetary officers wrote to Chairman Atkins urging investigations into delisting China-based issuers.[14] The letter asserts that Chinese language authorities actions foster opacity inconsistent with the Change Act’s reporting and anti-fraud necessities.
On September 18, 2025 in printed Remarks on the Investor Advisory Committee Assembly, Chairman Atkins signaled that the Fee could tighten the particular lodging accessible to international personal issuers.[15] He pointed to the SEC’s June 2025 idea launch in search of public suggestions on including eligibility situations, such at the least degree of international buying and selling quantity or a major itemizing on a significant international alternate, earlier than non-U.S. corporations can depend on lodging not afforded to home issuers.[16] Chairman Atkins framed the evaluate as a response to market shifts by which many international corporations are included in jurisdictions, e.g., the Cayman Islands, completely different from the place they’re headquartered and function, elevating governance concerns with implications for shareholder pursuits.
The SEC’s creation of a Cross-Border Activity Pressure is in step with its longstanding follow of forming particular job pressure groups to pay attention nationwide sources on precedence enforcement areas. In 2013, underneath Chair Mary Jo White, the SEC’s Enforcement Division launched the Monetary Reporting and Audit Activity Pressure (FRAud) to enhance detection and prevention of monetary reporting and accounting fraud,[17] in addition to the Microcap Activity Pressure to analyze microcap securities fraud and maintain gatekeepers accountable.[18] In 2017, reflecting Chairman Jay Clayton’s “Important Avenue” focus, the SEC fashioned the Retail Technique Activity Pressure to establish misconduct concentrating on retail traders.[19] And from 2021 by means of 2024, a Local weather & ESG Activity Pressure, introduced by Appearing Chair Allison Herren Lee and continued underneath Chair Gary Gensler, heightened scrutiny of local weather threat disclosures and underscored the SEC’s prioritization of ESG initiatives.[20]
With its announcement of the Cross-Border Activity Pressure, Chairman Atkins famous that “[w]e welcome corporations from all over the world in search of entry to the U.S. capital markets … [b]ut we is not going to tolerate unhealthy actors … the brand new job pressure will consolidate SEC investigative efforts and permit the SEC to make use of each accessible software to fight transnational fraud.” He additionally famous a Fee-wide method to defending U.S. traders, together with directing workers within the Divisions of Company Finance, Examinations, Financial and Danger Evaluation and Buying and selling and Markets in addition to the Workplace of Worldwide Affairs to think about and suggest new disclosure steering and any essential rule adjustments.
Firms with ties to China ought to anticipate continued, and probably heightened, SEC enforcement in conventional areas inside the SEC’s experience. After years of investigating FCPA violations, off-shore market manipulations, worldwide insider buying and selling rings and accounting fraud at Chinese language corporations, the enforcement workers has deep expertise and is well-poised to execute on its new mission of combatting cross-border funding fraud.
To some extent, previous is prologue and up to date enforcement actions involving Chinese language corporations provide a transparent preview of enforcement on this area and should function templates for the Cross- Border Activity Pressure because it initiates and advances future investigations.
Market Manipulation
Market manipulation, together with pump-and-dump and ramp-and-dump schemes, has been a conventional SEC enforcement space. On September 12, 2025—only a week after the announcement of the SEC’s Activity Pressure—the Justice Division introduced an indictment, within the Jap District of Virginia towards the co-CEO of a NASDAQ-listed Cayman islands expertise firm with its principal operations in China and a monetary advisor alleging a $110 million pump-and-dump scheme.[21] In keeping with the indictment, defendants allegedly funneled tens of thousands and thousands of shares of the corporate to fifteen co-conspirators by means of non-bona fide transactions after which launched a coordinated social-media marketing campaign to inflate the value and buying and selling quantity earlier than dumping the shares, producing over $110 million for defendants whereas traders noticed the corporate lose greater than $950 million in market capitalization. The FBI and SEC-OIG investigated this traditional alleged market manipulation.[22]
Accounting Fraud
Accounting fraud is a constant enforcement precedence for the SEC. In a current case, on February 6, 2024, the SEC introduced a settlement for accounting fraud expenses towards a cloud communications supplier, included within the Cayman Islands and headquartered in Beijing, whose American Depositary Shares traded on NYSE.[23] The SEC alleged that two senior managers orchestrated a fraudulent scheme by prematurely recognizing income on service contracts earlier than the Firm had completed the work. Consequently, the corporate overstated income for 2 quarters and was charged with violations of the antifraud, reporting, books-and- data, and inner controls provisions of the federal securities legal guidelines.
Chinese language Auditors
One other notable space of enforcement includes Chinese language auditors. In 2020, the Holding Overseas Firms Accountable Act (HFCAA) was enacted into legislation after China prevented the Public Firm Accounting Oversight Board (PCAOB) from inspecting China-based audit corporations who audit Chinese language corporations listed on U.S. exchanges.[24] Underneath the HFCAA, if the PCAOB states it can not examine an audit agency in a jurisdiction, the SEC should establish affected issuers and, after two consecutive years, ban buying and selling of their securities within the U.S. Though the PCAOB introduced in 2022 that it had full entry to audit corporations in mainland China and Hong Kong,[25] corporations in these areas stay topic to PCAOB examinations and associated SEC enforcement actions.
Whereas it doesn’t immediately implement the HFCAA, the SEC has assisted the PCAOB in disciplining Chinese language auditors because the difficulty arose and it has introduced its personal enforcement actions towards Chinese language auditors.[26]
Dealer-Sellers
There was current enforcement exercise towards dealer sellers with China ties or with international clients conducting buying and selling in international issuers for deficiency in SARs filings.
On November 22, 2024, the SEC introduced settled expenses towards a broker-dealer based by a Chinese language nationwide and with important China-related possession for submitting poor Suspicious Exercise Studies (SARs) that omitted required particulars explaining the allegedly suspicious conduct as required by FinCEN.[27] As an illustration, when a foreign-based shopper making important earnings and dealing with account restrictions because of a “excessive chance” of insider buying and selling, the SAR omitted the timeframe, the securities concerned, and different fundamental commerce particulars and rationale.[28]
On December 17, 2024, the SEC introduced one other set of settled expenses towards an internet low cost dealer and its former AML Compliance Officer for failing to file required SARs in violation of Change Act Part 17(a) and Rule 17a-8.[29] The SEC alleged that the corporate’s hundreds of largely retail clients, lots of whom have been primarily based in China, Malaysia, or Taiwan, routinely engaged in probably suspicious conduct, however that deficiencies within the firm’s AML program led to repeated failures to analyze and report.[30] The order additionally alleges that the AML officer repeatedly declined to analyze or file SARs even when alerted by inner surveillance or the clearing agency, and at occasions tipped clients to maintain buying and selling beneath average- daily-volume thresholds to keep away from evaluate. With out admitting or denying the findings, the corporate agreed to a $125,000 penalty, and the officer agreed to a $25,000 penalty.
Insider Buying and selling
The SEC has additionally introduced important insider buying and selling enforcement actions towards Chinese language merchants in advanced, high-profile insider buying and selling instances. Notably, the SEC’s Market Abuse Unit and Evaluation and Detection Middle have used superior information analytics to identify misconduct by offshore merchants, which is able to seemingly be key to the Cross-Border Activity Pressure’s agency-wide experience.
For instance, on August 16, 2024, the SEC obtained a closing judgment towards a Chinese language nationwide who was a accomplice of a Hong Kong-based personal fairness agency who allegedly engaged in huge buying and selling within the accounts of 5 Chinese language nationals, together with his aged dad and mom, amassing over $56 million of DreamWorks inventory earlier than its acquisition by Comcast. The courtroom granted the SEC’s request for an asset freeze and in the end imposed a $39.5 million civil penalty to be paid from funds frozen in brokerage accounts he allegedly used for insider buying and selling.[31]
In one other important case, the SEC charged the Chinese language CEO and Chief Know-how Officer of a Cayman Islands-incorporated, Beijing-based cell web firm whose securities traded on the NYSE with insider buying and selling in addition to allegedly making deceptive materials statements concerning the firm’s income.[32] The case is notable since along with charging c-suite executives with insider buying and selling in shares of their very own firm, the SEC charged the officers for trades that have been purportedly made pursuant to Rule 10b5-1 buying and selling plans, that are broadly utilized by public firm officers and administrators since trades pursuant to such plans can protect insiders from insider buying and selling legal responsibility underneath sure circumstances.
The Hong Kong Securities and Futures Fee (SFC) has additionally introduced plans to amend the Hong Kong Securities and Futures Ordinance (SFO) to offer it with higher powers to analyze and prosecute cross-border insider buying and selling.[33] Whereas the SFC already has powers to prosecute market misconduct (similar to value rigging and creating the looks of false buying and selling) happening in Hong Kong in relation to abroad listed securities, the SFC’s powers in relation to insider dealing are at the moment restricted to insider dealing happening in Hong Kong in relation to Hong Kong listed securities or their derivatives, in addition to securities dual-listed in Hong Kong and one other jurisdiction. These limitations on the SFC’s powers have traditionally meant that the SFC couldn’t convey motion immediately towards people in Hong Kong who have interaction in insider dealing in relation to overseas-listed securities, and was as a substitute restricted to aiding international regulators such because the SEC with their investigations.
We anticipate an uptick in insider dealing investigations in Hong Kong by the SFC in relation to U.S.-listed securities particularly as soon as the SFC acquires these powers to immediately prosecute this kind of misconduct. It will seemingly result in elevated collaboration by the SFC with the SEC (together with with the Cross-Border Activity Pressure) in relation to cross-border insider dealing investigations involving Hong Kong residents and/or Hong Kong licensed corporations buying and selling in US- listed securities.
The SEC’s new Cross-Border Activity Pressure and up to date enforcement historical past sign sustained, and sure escalating, cross-border scrutiny, significantly for China and Hong Kong primarily based issuers, Chinese language auditing corporations, and corporations that work on China-related offers. These entities ought to pay shut consideration to dangers associated to public disclosure, audit agency qualification, and keep sturdy inner accounting and disclosure controls to remain compliant with SEC necessities. As well as, they need to additionally monitor enforcement actions and investigations popping out of the SEC to get a way of what could come.
[1] SEC Publicizes Formation of Cross-Border Activity Pressure to Fight Fraud. https://www.sec.gov/newsroom/press-releases/2025-113-sec-announces-formation-cross-border- task-force-combat-fraud.
[2] America First Funding Coverage. https://www.whitehouse.gov/presidential- actions/2025/02/america-first-investment-policy/.
[3] Id., § 1.
[4] See Gibson Dunn Consumer Alert, Getting Severe About Tariff Evasion—New Commerce Fraud Activity Pressure Continues Development of DOJ’s High-Down Era of Investigative Targets. https://www.gibsondunn.com/getting-serious-about-tariff-evasion-new-trade-fraud-task-force- continues-trend-of-doj-top-down-generation-of-investigative-targets/.
[5] Chinese language corporations set for report US listings, undeterred by geopolitics. https://www.reuters.com/enterprise/finance/chinese-firms-set-record-us-listings-undeterred-by- geopolitics-2025-08-05/.
[6] Chinese language Firms Listed on Main U.S. Inventory Exchanges. https://www.uscc.gov/analysis/chinese-companies-listed-major-us-stock-exchanges.
[7] Id.
[8] Supra observe 5.
[9] See PCAOB Analysis Be aware, Exercise Abstract and Audit Implications for Reverse Mergers Involving Firms from the China Area: January 1, 2007 by means of March 31, 2010, right here.
[10] See SEC Approves New Guidelines to Toughen Itemizing Requirements for Reverse Merger Firms. https://www.sec.gov/information/press/2011/2011-235.htm. See additionally Gibson Dunn 2012 Mid-Yr Securities Enforcement Replace. https://www.martindale.com/matter/asr- 1553806.Securities.pdf at p. 24-25.
[11] Affirmation Listening to Earlier than the S. Comm. on Banking, Hous., & City Affs., 119th Cong. (Mar. 27, 2025) (video at 40:46). https://www.youtube.com/watch?v=7AyzxTQZg0E. In keeping with media stories, throughout his affirmation listening to, Chairman Atkins agreed to analyze Chinese language corporations for violations of U.S. disclosure legal guidelines when requested by Sen. Rick Scott, who mentioned his affirmation vote was contingent on Chairman Atkins ramping up scrutiny on Chinese language corporations. See New York Submit article, The warmth is on for newly confirmed SEC chairman Paul Atkins to crack down on Chinese language corporations. https://nypost.com/2025/04/12/enterprise/the-heat-is- on-for-newly-confirmed-sec-chairman-paul-atkins-to-crackdown-on-chinese-companies/.
[12] Chairman Moolenaar, Chairman Scott Urge SEC to Delist CCP-Linked Firms from U.S. Markets. https://selectcommitteeontheccp.home.gov/media/press-releases/chairman-moolenaar- chairman-scott-urge-sec-delist-ccp-linked-companies-us.
[13] Younger Asks SEC Chair to Defend U.S. Financial, Nationwide Safety from Chinese language Market Manipulation. https://www.younger.senate.gov/newsroom/press-releases/young-asks-sec-chair-to- protect-u-s-economic-national-security-from-chinese-market-manipulation/.
[14] Treasurer Pack Urges U.S. Inventory Change to Delist Chinese language Firms. https://wvtreasury.gov/About/Press-Releases/particulars/treasurer-pack-urges-u-s-stock-exchange- to-delist-chinese-companies.
[15] Remarks on the Investor Advisory Committee Assembly. https://www.sec.gov/newsroom/speeches-statements/atkins-091825-remarks-investor-advisory- committee-meeting.
[16] Idea Launch on Overseas Non-public Issuer Eligibility, 90 Fed. Reg. 24,232 (June 9, 2025) (SEC), https://www.federalregister.gov/paperwork/2025/06/09/2025-10428/concept-release-on- foreign-private-issuer-eligibility.
[17] Monetary Reporting and Accounting Fraud. https://www.sec.gov/newsroom/speeches- statements/spch091913ac.
[18] SEC Publicizes Enforcement Initiatives to Fight Monetary Reporting and Microcap Fraud and Improve Danger Evaluation. https://www.sec.gov/newsroom/press-releases/2013-2013-121htm.
[19] SEC Publicizes Enforcement Initiatives to Fight Cyber-Primarily based Threats and Defend Retail Buyers. https://www.sec.gov/newsroom/press-releases/2017-176.
[20] SEC Publicizes Enforcement Activity Pressure Targeted on Local weather and ESG Points. https://www.sec.gov/newsroom/press-releases/2021-42.
[21] Co-CEO of Chinese language Publicly Traded Know-how Firm and Monetary Advisor Indicted for Over $100M Securities Fraud Scheme. https://www.justice.gov/opa/pr/co-ceo-chinese-publicly- traded-technology-company-and-financial-advisor-indicted-over-100m.
[22] These kinds of market manipulations are bread-and-butter instances the SEC has introduced over time, together with towards merchants primarily based in China. See, e.g., SEC Fees 18 Merchants in $31 Million Inventory Manipulation Scheme. https://www.sec.gov/newsroom/press-releases/2019-216.
[23] SEC Fees China-Primarily based Tech Firm Cloopen Group with Accounting Fraud. https://www.sec.gov/newsroom/press-releases/2024-15.
[24] Holding Overseas Firms Accountable Act. https://www.sec.gov/rules-regulations/holding- foreign-companies-accountable-act.
[25] PCAOB Secures Full Entry to Examine, Examine Chinese language Companies for First Time in Historical past. https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-secures- complete-access-to-inspect-investigate-chinese-firms-for-first-time-in-history.
[26] See https://www.sec.gov/newsroom/press-releases/2022-176. The PCAOB has additionally taken a number of current actions towards Chinese language and Hong Kong audit corporations. See e.g., https://pcaobus.org/news-events/news-releases/news-release-detail/fact-sheet-pcaob-imposes- historic-sanctions-on-china-based-audit-firms; https://pcaobus.org/news-events/news- releases/news-release-detail/pcaob-sanctions-three-partners-of-kpmg-china-for-violations-of- audit-standards.
[27] SEC Fees Three Dealer-Sellers with Submitting Poor Suspicious Exercise Studies. https://www.sec.gov/newsroom/press-releases/2024-185. Webull disclosed its ties to China in its Annual Report. See Webull Corp. Type 20-F for the fiscal yr ended Dec. 31, 2024 (filed Apr. 25, 2025), https://www.sec.gov/ix?doc=/Archives/edgar/information/1866364/000121390025035656/ea0235698- 20f_webull.htm.
[28] Within the Matter of Webull Monetary LLC, Change Act Launch No. 101707, Admin. Proc. File No. 3-22330 (Nov. 22, 2024). https://www.sec.gov/information/litigation/admin/2024/34-101707.pdf.
[29] SEC Fees SogoTrade Inc. and Former Anti-Cash Laundering Compliance Officer for Failure to File Suspicious Exercise Studies (SARs). https://www.sec.gov/enforcement- litigation/administrative-proceedings/34-101936-s.
[30] Within the Matter of SogoTrade, Inc., Change Act Launch No. 101936, Admin. Proc. File No. 3-22363 (Dec. 17, 2024). https://www.sec.gov/information/litigation/admin/2024/34-101936.pdf.
[31] Shaohua (Michael) Yin, et al. https://www.sec.gov/enforcement-litigation/litigation-releases/lr- 26093.
[32] SEC Fees Cheetah Cellular’s CEO and its Former President with Insider Buying and selling. https://www.sec.gov/newsroom/press-releases/2022-169.
[33] Hong Kong Securities and Futures Fee, Session Conclusions on Proposed Amendments to Enforcement-related provisions of the Securities and Futures Fee. https://apps.sfc.hk/edistributionWeb/api/session/conclusion?lang=EN&refNo=21CP3.
Jina L. Choi, David Woodcock, and Emily Rumble are Companions and Gabriela Li is an Affiliate at Gibson, Dunn & Crutcher LLP. Winston Y. Chan, Tina Samanta, Osman Nawaz, William R. Hallatt, and Mark Okay. Schonfeld are Companions at Gibson Dunn who additionally contributed to this text. This put up first appeared on the agency’s weblog.
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