Action against Respondent, a financial services firm, in connection with an industry-wide sweep into practices related to the pre-release of American Depository Receipts (ADRs).  In connection with the settlement, Citibank neither admitted nor denied the SEC’s findings.  According to the SEC, Citibank  pre-released ADRs to pre-release brokers pursuant to an agreement which required the broker receiving the pre-released ADRs to represent, among other things, that it beneficially owned the ordinary shares (or an equivalent security) represented by the ADRs.  As the resolution notes, the pre-release brokers falsely certified to Respondent that they were compliant with the pre-release agreement.  The SEC alleges that Respondent should have known that the brokers did not always own the underlying ordinary shares when they requested pre-release transactions or that the brokers were otherwise using the pre-released ADRs in a way that violated the pre-release agreement.  Respondent agreed to pay disgorgement of $20,903,858.25, prejudgment interest of $4,258,893.71, and a civil penalty of $13,587,507.86.  The SEC’s Order acknowledges Citibank’s remedial acts and cooperation in the investigation.   In July 2018, the SEC announced a settlement of approximately $73.3 million with depository bank Deutsche Bank Trust Company Americas, and on December 17, 2018, announced a settlement of more than $54 million with depository bank BNY Mellon.  The SEC has also previously announced settlements with broker-dealers Banca IMI Securities Corp., ITG Inc., Deutsche Bank Securities Inc., and SG Americas Securities (as successor entity to Newedge USA, LLC) in connection with the pre-release of ADRs.

SEC Order

SEC Press Release