In late October 2025, FINRA notified its members that it has launched an investigation into broker dealers that have worked on IPO’s involving small-cap companies based out of China. FINRA has specifically indicated that it is concerned with potential market manipulation.
FINRA’s investigation is the latest in a string of actions by US regulators and quasi governmental organizations concerned with access to U.S. markets by China based companies. In September, Nasdaq proposed to adopt additional listing criteria for companies primarily operating in China, including Hong Kong and Macau. The additional listing standards would require that all China based companies complete a minimum of a $25 million capital raise in a firm commitment public offering to go public on the Exchange (see HERE).
In June, 2025, the SEC published a concept release and request for comment on the definition of a Foreign Private Issuer (FPI) and related rules, clearly indicating that the prior definition is not suited to the current environment where the vast majority of FPIs are China based (see my two part blog on the concept release HERE and HERE. Prior to that, in July 2023, the SEC’s Division of Corporation Finance published a sample comment letter directed at increasing disclosures by all China based companies (see HERE).
Even prior to that, In November 2021, the SEC passed the Holding Foreign Companies Accountable Act (HFCA) requiring foreign-owned issuers to certify that the PCAOB has been able to audit specified reports and inspect their audit firm within the last three years. If the PCAOB is unable to inspect the company’s public accounting firm for three consecutive years, the company’s securities are banned from trading on a national exchange. In the beginning, the only country on the “ban” list was China. Although China ultimately reached an agreement with the PCAOB, concerns around disclosures and potential fraud/manipulation have continued unabated. For more on the HFCA see HERE.
FINRA Notice
As indicated, in October 2025 FINRA published an announcement on its website that it is conducting a review of firm practices regarding public and private offerings of small-capitalized exchange-listed companies with business operations in foreign jurisdictions, such as China. Specifically, FINRA is reviewing certain member firms that have been involved in multiple small-cap offerings as either an underwriter, bookrunner, syndicate member, selling group member or placement agent, as well as certain member firms that have participated in initial and/or secondary market trading related to small-cap offerings, including firms with omnibus accounts trading in these securities.
The notice includes a specific list of documents and information that the subject member firms must submit to FINRA, including: (i) all versions of the firm’s written anti-money laundering compliance program; (ii) the firm’s written supervisory procedures relevant to securities trading (e.g., market manipulation, insider trading, spoofing and layering, marking the open or close, wash trading, pre-arranged or coordinate trading)—and any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance relevant to the same; (iii) the firm’s written supervisory procedures and all policies and documentation relevant to supervision of omnibus accounts; and (iv) a list of all tools (e.g., exception reports, alerts, monitoring systems) relevant to supervision of trading, and to detect and cause the reporting of suspicious activity (or attempted activity) in connection with: (a) the account opening process; (b) the deposit or delivery-in of shares; (c) trading; (d) money movements; (e) unauthorized access to customer accounts (e.g., account intrusions); and (f) ongoing customer due diligence.
FINRA is investigating activity from January 1, 2024 through September 30, 2025. For purposes of the investigation covers all IPOs that raised $25 million or less and were priced between $4.00 and $8.00, and follow on offerings and private placements involving those companies.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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