EAHCISS News (English)

Many investors did not manage to successfully convert their Russian ADRs because their western broker was too slow to process the request.  We are now seeing the first cases where arbitration committee's are compensating investors for these failures. We are aware of cases that were settled in the Netherlands where the broker compensated the full purchase price of the ADRs in addition to continued ownership of the ADRs as compensation for a failure to timely process a request for conversion of the ADRs into undelying Russian shares. There are also cases in the UK where the Financial Ombudsman ordered compensation for a failure by Interactive Brokers to process the request for conversion of Gazprom ADRs timely (see https://www.financial-ombudsman.org.uk/decision/DRN-5538810.pdf). We feel that the compensation rewarded could have been much higher if the investor would have presented the facts more fully (such as the statutory period of 3 years to claim unpaid dividends). Earlier the D...

We are often asked what will happen to unconverted ADR's. The honest answer is: we don't know. We do know that the ADR programs have expired for most issuers and that this allows the depositary banks (BNY, JPMorgan, Deutsche Bank, Citibank and RCS issuer) to sell the shares that are underlying the ADR's and distribute the cash received (after costs are subtracted). There is a concrete example of this. JPMorgan participated in the tender offer that was launched by Magnit supermarkets ( https://www.magnit.com/en/shareholders-and-investors/project/ ). Part of the tender offer was a 50% discount compared to the average share price on the Moscow stock exchange over a 6 month period. Permission would normally be required from the Russian government for such a sale. The current discount that the Russian government committee applies is 60% ( https://minfin.gov.ru/ru/permission/79-81?id_57=309307-vypiska_iz_protokola_zasedaniya_podkomissii_pravitelstvennoi_komissii_po_kontrolyu_...