Copying and distributing are prohibited without permission of the publisher
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
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
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
DRs are traded primarily on markets in Luxembourg,
Already have an account?
Please log in.
Subscribers have unlimited access to all current and archive content. Start your
subscription today - click on the button below.
Taking a free trial will give you access to the current issue for two weeks (excluding
some surveys and articles). Start your free trial today.