A congressional committee has initiated a formal investigation into several U.S. securities underwriters, focusing on their role in bringing Chinese companies to American stock markets that later became subjects of alleged manipulation schemes. The probe, led by the House Select Committee on the Chinese Communist Party, targets the firms’ due diligence and compliance practices related to these initial public offerings (IPOs).
Congressional Probe Targets Underwriters of Chinese IPOs
On Monday, the committee, chaired by Representative John Moolenaar with Representative Ro Khanna serving as the ranking member, issued formal letters to three New York-based brokerage firms: D. Boral Capital, Dominari Securities, and Revere Securities. The lawmakers are demanding a trove of documentation, including internal communications, trading records, funding sources, and the specific due diligence policies these firms employed when underwriting securities for Chinese issuers.
The committee’s correspondence alleges a direct link between the underwriters’ activities and sophisticated fraud. “These scam centers defraud American households through coordinated ‘pump-and-dump’ stock manipulation schemes involving Chinese shell companies listed on American exchanges, which your firm appears to facilitate,” the letters state. The described schemes typically involve artificially inflating a stock’s price through coordinated buying and promotional campaigns, followed by insiders selling their holdings at the peak, leaving retail investors with plummeting shares.
Scale of Alleged Investor Losses Draws Scrutiny
The lawmakers cite staggering estimates of financial damage, noting that approximately $16 billion in U.S. investor wealth has been drained since 2023 through manipulation schemes tied to Chinese issuers. They further pointed to data from the Federal Bureau of Investigation, which has documented a 300% increase in complaints specifically related to Chinese stock manipulation cases, underscoring the severity and growing frequency of the issue.
The investigation is examining whether U.S. financial intermediaries, through their underwriting and listing activities, may have inadvertently or directly facilitated these manipulation schemes. The firms have been given a deadline of this Friday to produce the requested documents. The committee’s action follows previous warnings from the Financial Industry Regulatory Authority (FINRA) about the risks associated with certain foreign issuers, as noted in the committee’s public materials.
Dominari Securities Under Scrutiny Amid Trump Family Ties
Dominari Securities has emerged as a focal point of the probe, in part due to its corporate connections. The firm is headquartered in New York’s Trump Tower and is owned by Dominari Holdings. Eric Trump, son of former President Donald Trump, is the company’s fourth-largest shareholder. In February 2025, both Eric Trump and Donald Trump Jr. joined Dominari’s advisory board.
Beyond the IPO underwriting at the center of the congressional probe, Dominari’s activities have intersected with the cryptocurrency space. In 2023, the firm helped facilitate fundraising for Thumzup, a publicly traded company that later announced a strategy to hold Bitcoin (BTC) on its balance sheet. Notably, Donald Trump Jr. was among the investors who participated in that fundraising round, contributing millions of dollars.
The committee’s inquiry reflects heightened regulatory and legislative attention on the pathways that allow foreign companies, particularly those from China, to access U.S. capital markets and the potential vulnerabilities in the listing and trading process that can be exploited for fraudulent purposes.
This article is based on the official letters sent by the U.S. House Select Committee on the Chinese Communist Party and publicly available data cited within them. Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.
