A broker-dealer agreed to settle SEC charges for the improper handling of "pre-released" American Depositary Receipts ("ADRs") and related supervisory failures.
According to the SEC Order, the broker-dealer improperly borrowed pre-released ADRs from other brokers when it should have known that those brokers did not own the foreign shares needed to support those ADRs. The SEC also determined that the broker-dealer had insufficient supervisory policies and procedures to adequately supervise its associated persons.
The broker-dealer agreed to (i) disgorge $2,275,609, (i) pay prejudgment interest of $468,346 and (iii) pay a civil monetary penalty of $1,251,548.95 to the SEC.
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