A New York state-chartered bank agreed to settle SEC charges of improperly handling "pre-released" American Depositary Receipts ("ADRs").
According to the SEC Order, the Bank of New York Mellon (the "Bank") provided ADRs to brokers in thousands of pre-release transactions when neither the brokers nor the customers had the necessary foreign shares needed to support those new ADRs. The SEC stated that as a result of the Bank's conduct, ADRs that were not backed by ordinary shares, as required by the ADR facility, were issued.
To settle the charges, the Bank agreed to disgorge over $29.3 million, to pay $4.2 million in prejudgment interest, and to pay a $20.5 million civil penalty. The SEC acknowledged the Bank's cooperation in the investigation and remedial acts.
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