Ex-Banca IMI executive pleads guilty to criminal antitrust charge
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Ex-Banca IMI executive pleads guilty to criminal antitrust charge 28 June 2019Washington DC Reporter: Jenna Lomax
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Larry Meyers, the former head of the securities lending desk at Banca IMI Securities, has pleaded guilty to a criminal antitrust charge for his involvement in a bid-rigging conspiracy for certain financial instruments.
Meyers admitted that, from at least as early March 2012 until at least August 2014, he and his counterparts at other broker-dealers conspired to submit rigged bids to borrow pre-release American Depository Receipts (ADRs).
ADRs, which are US 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 US Securities and Exchange Commission permits four US depository banks to create ADRs, which represent foreign ordinary shares and can be traded in the US.
Through the purchase and sale of ADRs, US investors are able to gain exposure to companies whose common stock is listed on foreign exchanges.
Meyers’ plea is the third in an ongoing investigation–Banca IMI and Industrial and Commercial Bank of China Financial Services previously pleaded guilty on 10 May 2019, and 14 June 2019, respectively.
Meyers 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, Meyers and his co-conspirators intensified their coordination in an effort to artificially increase 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. On many occasions, conspirators agreed that they all would submit the same bid.
Makan Delrahim, assistant attorney general of the Department of Justice’s Antitrust Division, said: “The guilty plea announced today represents the commitment of the Division and its law enforcement partners to hold accountable for market-corrupting collusion, not just the companies that benefit from that unlawful activity, but also the executives who carry it out.”
Robert Johnson, assistant director of the FBI’s Criminal Investigative Division, commented: “This guilty plea highlights just how thorough FBI investigations truly are. Individuals engaged in corrupt activity cannot expect to hide behind their companies. The FBI is committed to pursuing all those who use criminal means to enrich themselves at the expense of US investors.”
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