In order to prevent the “pump-and-dump” scam by Chinese companies, the NASDAQ Stock Exchange is planning to tighten its listing rules. Companies operating in China (including Hong Kong and Macau) will have a higher minimum requirement of 25 million US dollars for funds raised in their initial public offerings. Analysts suggest that the difficulty for Chinese enterprises to list in the United States will significantly increase.
Since 2024, the number of Chinese companies going public in the United States has been steadily increasing, but the amount of funds raised has shown a sharp decline, and more concerning is that some small Chinese concept stocks have deceived American investors by artificially inflating prices and then dumping their holdings at high levels, leading to a sharp drop in stock prices.
The so-called “pump-and-dump” scheme refers to artificially inflating a company’s stock price by interested parties, then suddenly selling their holdings at a high price, causing the stock price to plummet.
On September 3rd, the NASDAQ Stock Exchange announced that it proposed to amend the listing standards and is submitting the proposed rules to the U.S. Securities and Exchange Commission (SEC) for review. If approved, the implementation will begin immediately. This revision has increased the minimum fundraising requirement for new listings primarily operated in China, and established stricter suspension and delisting mechanisms for companies that fail to meet the standards.
According to documents released by NASDAQ, the revised standards include:
1. For companies choosing to list based on net profit standards, the minimum market value of public ownership will be 15 million US dollars (currently 5 million US dollars);
2. Accelerate the suspension and delisting process for companies with listing defects and a market value of less than 5 million US dollars;
3. The minimum requirement for public issuance funds raised for new listings mainly operated in China is 25 million US dollars.
NASDAQ stated that it will tighten the listing rules and trading standards for small-cap stocks to combat the “pump-and-dump” scams involving Chinese companies listed in the United States.
The exchange proposed to provide companies in the initial listing process a 30-day grace period to complete the original standard process, after which all new listings must comply with the new requirements. NASDAQ plans to formally implement the new regulations within 60 days after approval by the SEC regarding the accelerated suspension and delisting of companies.
The exchange mentioned that this rule adjustment was made after conducting an internal review of trading activities. The review identified patterns related to “pump-and-dump” scams, especially in the U.S. cross-market trading environment. In recent months, there has been a surge in suspicious fraudulent activities related to specific companies.
Since August 2022, nearly 70% of cases submitted by NASDAQ to regulatory agencies involve transactions with Chinese companies, which account for less than 10% of NASDAQ-listed companies.
On September 4th, Securities Times reported that the number of Chinese companies listed on the NASDAQ in the U.S. reached 52 in 2024, hitting a historical high, exceeding the peak of 29 companies in 2019.
According to Wind data, as of June 30, 2025, a total of 40 Chinese companies successfully entered the U.S. market in the first half of the year, raising a total of 871 million US dollars. Among them, 39 companies are listed on NASDAQ.
Continuing the trend from 2024, small and medium-sized enterprises have become the main force for IPOs in the U.S., with the fundraising scale generally smaller, with most companies raising between 5 million and 15 million US dollars.
Chinese affairs expert Wang He told Epoch Times reporters on September 4th that most Chinese companies listed in the U.S. choose to list on NASDAQ. He said, “With the new rules issued by NASDAQ, increasing the listing threshold for Chinese companies makes it much harder for Chinese enterprises to list in the U.S.”
Wang He believes that the new rules introduced by NASDAQ are not too harsh, “it only aims to improve the quality of Chinese listed companies, raise the threshold, and protect American investors, which is a legitimate move. From this perspective, although there is a background of Sino-U.S. competition, NASDAQ’s actions themselves are relatively moderate and do not carry explicit political connotations.”
Previously, cases of Chinese concept stocks engaging in “pump-and-dump” schemes and harvesting American investors have been reported frequently.
For example, The Wall Street Journal reported on June 16 that according to U.S. securities filing, Huaxia Boya, a company purportedly run by Chinese students offering international learning programs, disclosed in December 2024 that the company raised nearly 21 million US dollars from 30 large investors who agreed to purchase 160 million shares at around 13 cents per share.
However, according to a lawsuit filed in March, some of these investors were involved in a “pump-and-dump” scam that defrauded 600 victims. Seven of the large investors lured investors through Facebook ads and WhatsApp messages, selling over 50 million shares and making profits exceeding 480 million US dollars.
NASDAQ suspended trading of Huaxia Boya on June 3.
Additionally, a University of Utah professor, Braden Lindstrom, purchased shares of Jayud Global Logistics, a logistics company based in Shenzhen, on the NASDAQ stock market based on advice from a so-called financial advisor, resulting in him being defrauded of 80,000 US dollars.
Starting in December 2024, the company’s stock price rose for several months, then plummeted from 8 US dollars per share to 0.35 US dollars on April 1, 2025, a 96% drop. The company’s stock is currently at 0.19 US dollars per share.
A Wall Street veteran stated that in recent years, this pattern of Chinese companies cashing out in the U.S. stock market has occurred repeatedly, making these stocks susceptible to manipulation and tempting thousands of American retail investors to buy in.
Traders and investigators have noted that fraudulent activities by Chinese companies are rampant, frustrating U.S. regulatory agencies. Even when aware that these companies are marketing their stocks to American investors, U.S. regulatory authorities often struggle to obtain evidence in China. The U.S. Department of Justice is currently cracking down on these price manipulation frauds as a priority of the Trump administration’s white-collar enforcement plan.
Wang He believes that the U.S. government’s policies towards Chinese concept stocks are becoming increasingly stringent, not ruling out the possibility of eventually delisting all Chinese concept stocks if relations between the U.S. and China deteriorate.
The market value of Chinese concept stocks once exceeded 20 billion, but it is now just over 10 billion. Recently, the world’s largest hedge fund, Bridgewater Associates, liquidated all its Chinese concept stocks. “Many U.S. funds have already withdrawn or reduced their holdings in Chinese concept stocks. Therefore, the future prospects of Chinese concept stocks are very uncertain.”
In May, Paul Atkins, chairman of the U.S. Securities and Exchange Commission, received a letter from state treasurers of 23 states and other officials requesting the mandatory delisting of Chinese concept stocks. Legislation aimed at withdrawing retirement fund investments in Chinese concept stocks is advancing in state legislatures following federal policy adjustments in 2023.
Two heavyweight Republican lawmakers, John Moolenaar, chairman of the House Republican China Task Force, and Rick Scott, chairman of the Republican Senate Committee, wrote to Paul Atkins on May 2, requesting action against 25 Chinese companies listed on U.S. exchanges.
These lawmakers believe that companies such as Alibaba, Baidu, and JD.com have ties to the Chinese military, posing “unacceptable risks” to investors.
Furthermore, Wang He analyzed that as the difficulty of Chinese concept stocks listing in the U.S. increases, Chinese companies and individuals are becoming less confident in the decoupling of the Chinese and U.S. economies and the future prospects of U.S.-China relations, with a growing pessimistic view. “This will have a significant impact on the future trends of the Chinese economy.”