Domenick Migliorato, a former supervisor of the securities lending desk at Industrial & Commercial Bank of China Financial Services LLC, agreed to settle SEC charges for his supervisory failures involving the improper handling of prereleased American depositary receipts.
The regulator found that under Migliorato's watch, personnel on the securities lending desk failed to take reasonable steps to determine whether the proper number of foreign shares were owned and held by the company or its customers. This failure opened up the possibility that the ADRs could be used improperly for short selling or dividend arbitrage. From 2011 through 2014, Migliorato was responsible for the company's compliance with the prerelease requirements, according to the SEC's findings.
Without admitting or denying the SEC's findings, Migliorato agreed to pay a civil money penalty of $150,000. In addition, he is prohibited from acting in a supervisory capacity for at least three years.
Industrial & Commercial Bank of China Financial Services, a unit of Industrial & Commercial Bank of China Ltd., agreed to pay more than $42 million earlier this year to settle SEC charges for improper handling of prereleased ADRs.