US: First individual defendant pleads guilty in ADRs investigation

Larry D. Meyers, the former head of the securities lending desk at Banca IMI Securities, pleaded guilty to a criminal antitrust charge for his involvement in a bid-rigging conspiracy for certain financial instruments, the Department of Justice announced.

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).  Meyers’ plea is the third in the ongoing investigation; Banca IMI and Industrial and Commercial Bank of China Financial Services previously pleaded guilty on May 10, 2019, and June 14, 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, the conspirators agreed that they all would submit the same bid.  Meyers and his co-conspirators reached these agreements using, among other means, private chat rooms and text messages.

“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,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.