Deutsche Bank To Pay $75 Mln Penalty For Improper Handling Of ADRs

(RTTNews) - The Securities and Exchange Commission Friday said Deutsche Bank AG's two U.S.-based subsidiaries will pay nearly $75 million to settle charges of improper handling of "pre-released" American Depositary Receipts (ADRs).

The case stems from a continuing SEC investigation into abuses involving pre-released ADRs. The SEC found that their misconduct allowed pre-released ADRs to be used for abusive practices, including inappropriate short selling and inappropriate profiting around dividend payouts.

ADRs are U.S. securities that represent foreign shares of a foreign company. The practice of "pre-release" allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.

The SEC found that Deutsche Bank's subsidiary improperly provided thousands of pre-released ADRs over a more than five-year period when neither the broker nor its customers had the requisite shares.