Monday, September 18, 2006
American Depository Receipts: TV Azteca
The SEC has settled charges against Mexico's TV Azteca and other Mexican companies for failing to file annual reports on SEC Form 20-F since 2004. The SEC also charged the group with failing to disclose the nature of a related party transaction involving a subsidiary of TV Azteca and the company's owner.
TV Azteca's ADRs were traded on the NYSE and under Section 13(a) of the Exchange Act and Rule 13a-1, the company was required to file an Annual Report on Form 20-F. The SEC also settled charges against individuals associated with TV Azteca, who were required to pay penalties and disgorgement of $8.5 million. The settlement with the individuals also prohibits them from serving as officers or directors of public companies in the U.S. for a period of 5 years.
A quick word about ADRs: ADRs may be either sponsored or unsponsored facilities. Unsponsored facilities are generally established by large banks that purchase the underlying securities and then establish the ADR without the participation of the issuer. Sponsored facilities may be created by the issuer and the creation fo the sponsored facility subjects the issuer to the SEC's jurisdiction.
For more information about the settlement with TV Azteca, see the SEC's press release
and the related New York Times article.