The US Securities and Exchange Commission has launched a sweeping investigation into several prominent American universities over concerns they failed to properly disclose hundreds of millions of dollars in foreign funding. The probe represents a significant escalation in federal efforts to monitor foreign influence within American higher education institutions.
Major Texas Institutions Under Microscope
According to documents obtained by The Independent, the SEC has issued subpoenas to multiple universities, with Texas A&M University and the University of Texas system among the primary targets. The investigation focuses on whether these institutions violated federal securities laws by not disclosing substantial financial contributions from foreign governments and entities.
The scale of undisclosed funding is believed to be substantial, with one source familiar with the matter suggesting the amounts involved could reach "hundreds of millions of dollars" from countries including China and Qatar.
Broader Implications for Academic Transparency
This investigation marks a notable expansion of the SEC's mandate into the realm of higher education funding transparency. Legal experts suggest the commission is applying securities law principles typically reserved for publicly traded companies to major universities that issue tax-exempt bonds.
"This represents a novel application of securities law," noted one higher education legal specialist. "The SEC is essentially arguing that when universities issue bonds to investors, they have an obligation to disclose material risks, including potentially problematic foreign relationships that could affect their reputation or operations."
Congressional Pressure Mounts
The SEC's investigation comes amid increasing congressional scrutiny of foreign influence in American academia. The House Select Committee on the Chinese Communist Party has been particularly vocal about the need for greater transparency regarding foreign funding, especially from China.
Republican Congressman Darrell Issa emphasised the seriousness of the situation: "The fact is, we're talking about a potentially massive and unacceptable breach of the public trust. These are public universities that have obligations to be transparent about who is funding them and for what purpose."
University Responses and Next Steps
While the investigated universities have acknowledged receiving subpoenas, their responses have varied:
- Texas A&M confirmed it is "cooperating fully" with the SEC investigation
- The University of Texas system has not provided detailed public comments
- Other unnamed institutions are believed to be involved in the widening probe
The outcome of this investigation could have far-reaching consequences for how American universities manage and disclose foreign partnerships and funding sources, potentially leading to stricter reporting requirements across the higher education sector.
