Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—Waters prods Atkins to act against ‘ramp-and-dump’ scams, (Jul 10, 2026)

By Anne Sherry, J.D.

The Ranking Member said that ramp-and-dump fraud schemes have scammed retails investors out of billions of dollars.

House FSC Ranking Member Maxine Waters asked SEC Chairman Paul Atkins to answer questions about what the Commission is doing to address “ramp-and-dump” stock manipulation schemes. In her letter, Waters stated that these schemes originate in China and involve stocks listed on Nasdaq and the NYSE. “I view the funneling of billions of dollars in Americans’ retirement savings to criminal enterprises overseas to be a massive problem,” she wrote.

Waters described ramp-and-dump schemes thusly: an entity contacts U.S. investors on social media and encourages them to make a series of purchases of public shares of (typically) low-volume stocks. The perpetrators control large volumes of the stock, which they sell off once the “investment club” members have inflated the price.

The scammers may impersonate legitimate brokerage firms to appear credible and use bots to make the “investment club” look bigger than it is. Waters said that the schemes have been perpetrated primarily by Chinese nationals using China-based companies but that they may be transitioning to U.S.-registered companies to evade detection.

In one month alone, schemes run on four stocks using Facebook and WhatsApp groups resulted in $3.7 billion in investor losses, Waters said, citing a report from Alpha Quantum.

During a hearing earlier this year, the FSC Capital Market Subcommittee heard testimony that the technology exists to detect this fraud before significant investor harm occurs, but that the current regulatory and compliance framework is designed to investigate fraud after the fact rather than stop it before it gains traction.

Waters credited the SEC with paying close attention to the schemes and for having founded the Cross-Border Task Force to root out pump-and-dump and ramp-and-dump fraud. However, she said that more must be done to prevent this significant and growing problem.

To that end, Waters asked Atkins to respond to 12 questions about what steps the SEC is taking and how the Financial Services Committee can help. The questions also probe the involvement of other regulators and self-regulatory organizations, such as by asking how the SEC is supervising exchanges, encouraging the PCAOB to stay alert, and engaging with FinCen. Waters also asks Atkins to confirm whether the SEC, FINRA, and the exchanges are using the Consolidated Audit Trail as part of the regulatory response.

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