The US Securities and Exchange Commission is ordering the brokerage firms of Cantor Fitzgerald and BMO Capital Markets Corp to pay more than $647,000 and $3.9 million respectively to settle charges that they handled 'pre-released' American Depositary Receipts improperly. This brings the total number of firms that the SEC has punished for such transgressions up to 13.

Both firms, according to the SEC, obtained pre-released ADRs when they should have known that the pre-release transactions were not backed by foreign shares.

The order against BMO Capital Markets says that between January 2012 until approximately December 2014 it received pre-released ADRs from pre-release brokers that depositaries had issued. The pre-release brokers had not complied with their obligations under the pre-release agreements, nor had Capital Markets taken reasonable steps to satisfy itself that they had done so. The firm's associated persons on its securities lending desk thereby broke section 17(a)(3) Securities Act 1933.

On several occasions, pre-release brokers explicitly informed BMO Capital that the ADRs were coming from depositaries. On other occasions, BMO Capital was aware that its affiliate in the United Kingdom had negotiated the terms of pre-release transactions, or discussed the availability of pre-released ADRs, directly with depositaries and then arranged to obtain the pre-released ADRs through the pre-release brokers.

The order against Cantor Fitzgerald finds that the firm also improperly obtained pre-released ADRs directly from depositary banks. It, too, says that the firm broke s17(a)(3) and failed to rule the people on its securities lending desk.

The total of monies that the SEC has charged firms for handling ADRs improperly exceeds $427 million. It is in the middle of a campaign against these practices.