Wedbush to Pay More Than $8.1 Million for Improper Handling of ADRs

The Securities and Exchange Commission today announced that Wedbush Securities Inc. will pay more than $8.1 million to settle charges for improper handling of "pre-released" American Depositary Receipts (ADRs). This is the SEC's 11th action against a bank or broker resulting from the SEC's ongoing investigation into abusive ADR pre-release practices, which, thus far, has resulted in monetary settlements exceeding $422 million. ADRs– U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. 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 ADRs represent.