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Broker-Dealer Settles SEC Charges for Improperly Handling Pre-Released ADRs

A broker-dealer agreed to pay more than $135 million to settle SEC charges for improperly handling "pre-released" American Depositary Receipts ("ADRs").

According to the SEC Order, JPMorgan Chase Bank, N.A. ("JPMorgan") issued ADRs that in several instances "were not backed by ordinary shares as required by the ADR facility." The SEC alleged that JPMorgan, at various times, "pre-released ADRs to Pre-Release Brokers" without ensuring that those "on whose behalf the pre-released ADRs were being obtained" represented themselves accurately and that they did, in fact, beneficially own the corresponding number of ordinary shares.

The SEC recognized JPMorgan's significant voluntary cooperation and remediation. JPMorgan neither admitted to nor denied the SEC's allegations.

Primary Sources

  1. SEC Order: JPMorgan Chase Bank, N.A.
  2. SEC Press Release: JPMorgan to Pay More than $135 Million for Improper Handling of ADRs

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Tags

Regulated Activities
Sec Loan / Repo / TBA Supervision / Compliance
Regulated Entities
Banking Entities
Regulated Products
Securities
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
SEC