JP Morgan Chase will pay $135 million to settle claims that it improperly handled thousands of transactions involving foreign companies’ shares. JPMorgan improperly provided American depositary receipts for foreign shares that weren’t in the bank’s custody. This resulted in an improper inflation of the actual number of a foreign company’s tradable shares, the Securities and Exchange Commission said .
In the past year, the SEC has had similar settlements with three other banks: BNY Mellon, which agreed to pay more than $54 million; Citigroup Inc., which agreed to pay more than $38 million; and Deutsche AG, which agreed to pay more than $75 million.
The SEC is continuing this investigation into other banks.
Foreign companies transfer shares to the banks, which use them to back corresponding securities issued to U.S. investors. The securities track the price of the underlying shares. Brokers who sell or transfer ADRs are typically responsible for ensuring that a matching number of foreign shares have been deposited with a custodian.