Citibank has agreed to pay $38.7 million to settle charges that it was negligent in conducting thousands of transactions involving American Depositary Receipts (ADRs).

According to the U.S. Securities and Exchange Commission, an investigation of Citibank’s ADR practices found the bank allowed ADRs to be “pre-released” while not backed by actual shares, leaving them ripe for potential market abuse.

In agreeing to the settlement, Citibank joined Deutsche Bank and brokers ITG Inc. and Banca IMI Securities Corp. that have been swept up recently in the SEC’s crackdown on improper handling of pre-released ADRs.

The settlement includes the disgorgement of about $20.9 million in net revenues that Citibank generated from negligently conducted pre-release transactions between August 2011 and November 2016.

“Our charges against Citibank are the latest in our ongoing investigative effort to hold accountable Wall Street institutions that participated in an industry-wide fraud,” Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office, said in a news release.

“Our investigation into these practices has revealed that banks and brokerage firms profited while ADR holders were unaware of how the market was being abused,” he added.

The practice of pre-release allows a bank to release ADRs to a broker without the deposit of foreign shares, provided the broker or its customer beneficially owns the number of foreign ordinary shares that corresponds to the number of shares the ADR represents.

“Contrary to how pre-release transactions were supposed to work, Citibank at times pre-released ADRs to pre-release brokers in circumstances where Citibank was negligent with respect to whether the pre-release brokers [or their customers] actually beneficially owned the corresponding number of ordinary shares,” the SEC said in an administrative order.

The commission said Citibank staff knew or should have known brokers may not have been complying with their pre-release obligations and that their negligence “at times facilitated short selling” and enabled the settlement of trades with some ADRs that were not actually backed by foreign ordinary shares.

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