US lawmakers have opened a new investigation into the role of New York-based IPO underwriters in bringing Chinese companies to US stock exchanges, amid allegations that several of these listings were linked to large-scale stock manipulation schemes. The inquiry, led by the House Select Committee on China, focuses on whether financial firms failed to prevent or potentially enabled fraudulent practices tied to small-cap Chinese companies.
The committee announced that letters were sent to executives at D. Boral Capital LLC, Dominari Securities LLC, and Revere Securities LLC requesting detailed information about their involvement in underwriting initial public offerings of certain Chinese companies. According to the committee, these firms may have knowingly—or through weak oversight—facilitated listings that were later linked to so-called “ramp-and-dump” stock manipulation schemes.
The investigation was launched by committee leaders John Moolenaar and Ro Khanna. In their letters, the lawmakers claim the schemes represent part of what they describe as a “systematic assault” on American investors linked to entities connected to the Chinese Communist Party. The committee alleges that the financial structures used by some of the companies, particularly variable interest entity arrangements, give US investors no direct ownership of the underlying Chinese businesses.
A report by Bloomberg News cited in the investigation estimates that about $16 billion in market capitalization has been wiped out since 2023 due to apparent manipulation in these small-cap Chinese listings. Many of the companies involved are shell entities that were listed on US exchanges before experiencing sharp price spikes followed by rapid collapses.
Regulatory scrutiny has also intensified. The U.S. Securities and Exchange Commission has issued more than a dozen trading suspensions involving foreign companies suspected of participating in similar schemes. The actions followed the creation of a cross-border enforcement task force announced last September under SEC Chairman Paul Atkins.
Lawmakers also raised concerns about a network of “nominee accounts” allegedly used in the schemes. According to the committee, individuals inside China were able to open large numbers of brokerage accounts funded by undisclosed third parties and ultimately controlled by hidden principals based in the People’s Republic of China.
As part of the investigation, the House committee has requested extensive records dating back to 2020. These include documentation related to underwriting due diligence, “know your customer” verification procedures, and any off-channel communications that may have taken place during the IPO process. Executives from the firms named in the inquiry had not publicly responded to requests for comment.
The probe is the latest move by the House Select Committee on China to scrutinize financial ties between US markets and Chinese companies. In April last year, the panel sent letters to JPMorgan Chase & Co. and Bank of America Corp. urging them to withdraw their involvement in the planned IPO of Contemporary Amperex Technology Co. after the U.S. Department of Defense designated the company as a Chinese military-linked enterprise. The committee has also questioned the trading platform Webull Corp. over alleged connections to the Chinese Communist Party.
