WASHINTON – Initial public offerings (IPOs) of tiny foreign companies in the United States have all but disappeared this year after regulators cracked down on apparent pump-and-dump schemes, many of them based in Asia, that authorities say cheated mom-and-pop investors around the globe.
Only 13 so-called microcaps have gone public on Nasdaq and the New York Stock Exchange so far in 2026, compared with almost 80 by the midpoint of 2025. Just two of this year’s newest companies come from Asia, a fraction of the almost 100 tiny Asia-based companies that debuted on US exchanges in 2025, according to public filings.
All told, this year’s crop of microcaps based in the US and overseas raised less than US$300 million (S$387 million), with one taking in US$40 million and the rest less thanUS$25 million apiece. The tally contrasts with the nearly 140 microcap IPOs that raised US$1.6 billion in all of 2025, many of which soared and then crashed in spectacular fashion.
Some of the debuts in 2025, including an Indonesia-based online travel agent and an all-you-can-eat hotpot chain with three Hong Kong outlets, had their trading suspended by the US Securities and Exchange Commission, which issued unusual warnings about people using social media to artificially inflate share prices of the two firms.
The once-hot market for such tiny newcomers has cooled as exchanges tightened rules for small listings and regulators stepped up scrutiny on firms with wild price gyrations. While fewer IPOs wasn’t necessarily the goal, cutting off the spigot for new listings of small overseas firms means fewer opportunities for would-be market manipulators to suck in investors and erase billions in market value.
In a pump-and-dump scheme, perpetrators acquire stakes in a company and cajole others to buy at ever-rising prices, sometimes using high-pressure tactics via online forums and chatrooms. Then they dump their own holdings in bulk, sending the price plunging and leaving investors who fell for the pitch with painful losses.
Regulators and market heavyweights like Citadel Securities and Charles Schwab have been warning for years about the risks of investing in foreign microcaps with thin track records and robust social-media campaigns. The warnings intensified in 2025, when a record number of small public companies debuted. A Bloomberg analysis in January showed evidence that promotions on Whatsapp and subsequent crashes affected a quarter of the smallest companies that have gone public on Nasdaq since 2023. Most of those affected were based in Asia.
Nasdaq added rules in December that will give it more tools to reject new listings if something seems amiss at a company or at the advisory firms helping to bring it public. The exchange is also targeting firms headquartered in China and Hong Kong with new requirements that include increasing the amount of money companies based there would need to raise to go public. A Nasdaq analysis of data from August 2022 to April 2025 found that 143 of 151 China-based companies wouldn’t have qualified to list under the stricter new rules.
The message to the market has been clear, said Mark Donohue, a former SEC policy adviser and founder of Thirty4 Advisory. “With the SEC’s statements on these matters and the Nasdaq’s efforts to tighten its listing program, the writing is on the wall for both the issuers and those trying to manipulate the stocks.”
To be sure, not all microcaps with falling share prices are the subjects of pump-and-dump campaigns. Many are early-stage but legitimate firms seeking to raise capital, and company managers aren’t necessarily involved or aware of such schemes.
The stock prices for the two Asia-based microcaps that launched so far in 2026, Japan’s Micware and Hong Kong-based Green Circle Decarbonize Technology, have steadily declined by more than 50 per cent since their IPOs. Regulators haven’t accused either company of wrongdoing. Prices for microcaps can be volatile because there are fewer available shares available to absorb surges in trading that can happen for benign reasons.
Takuma Segawa, Micware’s chief financial officer, told Bloomberg News he doesn’t believe the firm’s stock has been targeted by any illegal pump and dump schemes, but recent news of microcap manipulations meant the firm needed to proceed carefully. “As a Japanese company, we are new to the US stock market,” Segawa said. “And it can be very scary.” BLOOMBERG
