This quarter, two New York-based broker-dealers, Banca IMI Securities Corp. (“Banca IMI”) and Industrial & Commercial Bank of China Financial Services, LLC (“ICBCFS”), pleaded guilty to criminal antitrust charges for their involvement in a bid-rigging conspiracy surrounding pre-release American Depository Receipts (“ADRs”).  Larry Meyers, the former head of Banca IMI’s securities lending desk, also pleaded guilty to related charges.

ADRs represent ordinary shares of publicly traded companies that are exclusively listed on foreign stock exchanges and are therefore otherwise inaccessible for most U.S. investors.  They are created by four U.S. depository banks as permitted by the SEC.  According to DOJ, the conspiracy involved working with other institutions and individuals to submit rigged bids to borrow pre-release ADRs from the depository banks at artificially suppressed rates.

Banca IMI pleaded guilty on May 10, 2019, and agreed to pay over $2 million in criminal penalties, while ICBCFS pleaded guilty on June 14, 2019, and agreed to pay more than $3 million.  Meyers pleaded guilty on June 27, 2019 and is awaiting sentencing.

DOJ Press Release (Banca IMI Securities)

DOJ Press Release (ICBCFS)

DOJ Press Release (Meyers)