SG Americas Securities Charged for Improper Handling of ADRs

The Securities and Exchange Commission today announced that SG Americas Securities LLC will pay more than $800,000 to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs), predominantly by its predecessor entity. In its order against SG Americas, a registered broker-dealer and subsidiary of Paris-based Société Générale S.A., the SEC found that the misconduct of predecessor entity Newedge USA LLC allowed pre-released ADRs to be issued that were not backed by the appropriate number of ordinary shares. This is the fifth action against a depository bank or broker for abusive pre-release practices resulting from the SEC’s ongoing investigation into abuses involving pre-released ADRs. Such practices have the potential to artificially inflate the total number of a foreign issuer’s tradeable securities, diluting existing shareholders’ equity.