A broker-dealer agreed to settle SEC charges for failing to properly handle "pre-released" American Depositary Receipts ("ADRs") and for related supervisory failures.
According to the SEC, 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 necessary to support those ADRs. The SEC also determined that the broker-dealer had insufficient supervisory policies and procedures to adequately supervise its securities lending desk personnel.
The broker-dealer agreed to (i) disgorge $326,096.87, (ii) pay prejudgment interest of $80,970.35, and (iii) pay a civil monetary penalty of $179,353.27 to the SEC.
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