- To settle charges of improper handling of pre-released American Depositary Receipts.
- Follows similar actions on Banca IMI in Aug. 2018 , and ITG.
- US securities representing foreign shares of foreign company, require corresponding foreign shares held in custody at depositary bank, pre-release issue without deposit.
- Foreign shares, if agreement with a depositary bank and broker/customer owns them.
- SEC investigated abuses involving pre-released ADRs involving Deutsche Bank Trust Co. Americas a depositary bank, and Deutsche Bank Securities Inc., a broker-dealer.
- Misconduct allowed pre-released ADRs to be used for abusive practice, inappropriate short sales, inappropriate profiting around dividend payout, as investigations proved.
- Improperly provided thousands of pre-released ADRs over more than five-year period.
- When neither broker nor customers owned corresponding foreign shares, DB policies, procedures failed to detect issue, hundreds securities laws violations went unnoticed.
- DB Trust Company agreed to return $44.4mn alleged ill-gotten gains plus $6.6mn in prejudgment, interest and more than $22.2 million penalty, nearly $73.3mn in total.
- DB Securities paid $1.1mn in disgorgement, interest, and nearly $500,000 in penalty.