Banca IMI Securities has pleaded guilty to an antitrust charge and was sentenced to pay a criminal fine in excess of $2 million for its involvement in bid-rigging for certain financial instruments.
Banca IMI stated that from March 2012 until at least August 2014, it conspired with other institutions and individuals to submit rigged bids to borrow pre-release American Depository Receipts (ADRs).
Banca IMI pleaded guilty to conspiring to borrow pre-release ADRs from US depository banks at artificially suppressed rates.
During the conspiracy, a US depository bank began using an auction-style process for pre-release ADRs and invited Banca IMI and other broker-dealers to submit competitive bids for rates to borrow ADRs.
In response, Banca IMI and its co-conspirators intensified its coordination in an effort to increase artificially their profits under the auction-style process.
On at least 30 occasions, Banca IMI reached an agreement with one or more co-conspirators as to the bids they would submit to US depository banks.
Worldwide, thousands of publicly traded companies list its shares of common stock only on foreign stock exchanges, but most US investors are unable to purchase or sell such foreign shares.
The US Securities and Exchange Commission, however, permits four US depository banks to create ADRs, which represent foreign ordinary shares and can be traded in the United States.
Through the purchase and sale of ADRs, US investors are able to gain exposure to companies whose common stock is only listed on foreign stock exchanges.
Makan Delrahim, assistant attorney general at the Justice Department’s Antitrust Division, said: “This charge represents the commitment of the Department of Justice and its law enforcement partners to uncovering and prosecuting cheaters who corrupt our financial and capital markets.”
He added: “Complex financial markets are not beyond the reach of the antitrust laws. The Antitrust Division will aggressively pursue criminals in technically complicated markets, including those that some wrongly presume may be beyond detection or the reach of antitrust enforcement.”
Robert Johnson, assistant director of the FBI’s Criminal Investigative Division, commented: “The FBI is committed to rooting out corruption and fraud against the United States wherever it occurs.”
He added: “The guilty plea today is the result of the FBI International Corruption Unit’s persistent and ongoing efforts to protect competition and identify those engaged in anticompetitive, fraudulent conduct.”
