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within Intellectual Property, Food, Drugs, Healthcare, Life Sciences and International Law topic(s)
A broker-dealer agreed to settle SEC charges for improper
handling of "pre-released" American Depository Receipts
("ADRs").
According to the SEC, Wedbush Securities, Inc.
("Wedbush") improperly obtained pre-released ADRs from
depository banks and loaned them to counterparties without
"taking reasonable steps to determine whether the requisite
number of ordinary shares was owned and custodied by Wedbush and
its counterparties." The SEC alleged that such conduct
resulted in the inflation of the total number of a foreign
issuer's tradeable securities, which further led to
inappropriate short-selling and dividend arbitrage.
Wedbush agreed to disgorge over $4.8 million, as well as more
than $2.4 million in penalty, for total monetary relief of more
than $8.1 million.
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