Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

×

Status message

Start your free, no obligation 5-day trial to continue exploring with full access.

Citibank to pay $38.7M for improper handling of ADRs

Jaclyn Jaeger | November 7, 2018

Citibank has agreed to pay $38.7 million to settle charges of improper handling of “pre-released” American Depositary Receipts, the Securities and Exchange Commission announced on Nov. 7. This is the second action against a depositary bank and sixth action against a bank or broker resulting from the SEC’s ongoing investigation into abusive ADR pre-release practices.

American Depositary Receipts (ADRs)—U.S. securities that represent foreign shares of a foreign company—require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.

The SEC found that Citibank improperly provided ADRs to brokers in thousands of pre-release transactions when neither the...

Read this single article for $49, or click the subscribe button below to review subscription options.

Enjoy unlimited access to thousands of articles, browse five years of digital magazines, qualify for reduced admission to events, and more.