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Exclusive: GDRs in alleged fraud

05 June 2014


Gaps between regulatory jurisdictions have allowed depositary receipts to become used in alleged fraud, market abuse and money laundering. Anna Reitman investigates

Read more: Depository receipts money laundering GDR DR Anna Reitman

Depositary receipts (DRs) are increasingly being identified by regulators as instruments used in fraud and money laundering, but the international nature of these types of certificates makes enforcement complicated.

DRs are financial instruments that can be thought of as the estranged twin of ordinary shares. Known as American depositary receipts (ADRs) in the US, ADRs are a type of security that allow shares of a foreign firm to be traded in US dollars on US securities markets.

Global depositary receipts (GDRs), as they are known elsewhere, replicate the function in other markets. Such products have real benefits – they are designed to provide investors with an easy and cost-effective way to buy shares in a foreign company and save money by reducing administration costs and avoiding foreign taxes. Meanwhile, foreign companies benefit because they get access to wealthy investors in developed markets.


DRs are traded primarily on markets in Luxembourg, London...