ABN AMRO Clearing Chicago LLC agreed to settle the administrative proceeding filed by Securities and Exchange Commission (SEC) alleging that the firm mishandled pre-released American Depository Receipts (ADRs)
ADRs are U.S. bank-issued certificates that represent shares of foreign companies’ stock. Pre-released ADRs is a practice that allows the issuance of certificates without the deposit of foreign shares, provided that there is an agreement between a depositary bank and the receiving broker or its customer owns a number of foreign shares that corresponds to the number of shares the ADRs represent, according to the SEC.
Under the settlement, ABN AMRO agreed to pay more than $586,000 without admitting or denying the allegations of the Commission. The amount included the return of more than $326,000 of ill-gotten gains and $179,353 in penalty plus $80,970 in prejudgment interest.
SEC findings and allegations against ABN AMRO
The SEC Enforcement Division conducted an investigation into ABN AMRO’s ADR pre-lease practices before filing an administrative proceeding against it.
