In re ITG Inc.

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 10279 / January 12, 2017 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79776 / January 12, 2017 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-17770 
 
In the Matter of 
 
ITG Inc.  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTION 8A OF THE 
SECURITIES ACT OF 1933, AND SECTION 
15(b) OF THE SECURITIES EXCHANGE 
ACT OF 1934, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS AND A 
CEASE-AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”) and Section 15(b) 
of the Securities Exchange Act of 1934 (“Exchange Act”), against ITG Inc. (“ITG” or 
“Respondent”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 
1933, and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing 
Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 
 
 
 
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:   
 
Summary 
 
1. These proceedings arise out of ITG’s improper practices involving the pre-release 
of American Depositary Receipts (“ADRs”).  ADRs allow U.S. investors to invest in foreign 
companies without having to purchase the shares in the foreign markets, and allow foreign 
companies to get increased exposure to U.S. markets. 
2. ADR facilities, which provide for the issuance of ADRs, are established by a 
depositary bank (the “Depositary”) pursuant to a depositary agreement (“Depositary 
Agreement”).   
3. Typically, a Depositary delivers ADRs to a market participant who delivers the 
corresponding number of foreign securities to the Depositary’s foreign custodian 
(“Custodian”).  However, in certain situations, Depositary Agreements may provide for a “pre-
release” transaction, in which an investor can obtain newly issued ADRs from the Depositary 
when the foreign securities have been purchased but prior to their delivery to the 
Custodian.
2
  Such pre-released ADRs can only be obtained by parties, typically brokers, that 
have entered into pre-release agreements (“Pre-Release Agreements”) with the Depositaries.  
The Pre-Release Agreements, consistent with the Depositary Agreements, require the broker 
receiving the pre-released ADRs (or its customer on whose behalf the broker is acting) to own 
the ordinary shares that evidence the ADRs, and to assign all beneficial right, title, and interest in 
those ordinary shares to the Depositary while the pre-release transaction is outstanding.  In 
effect, the broker or its customer becomes the temporary custodian of the ordinary shares that 
would otherwise have been delivered to the Custodian.  
4. Since at least 2011, ITG had Pre-Release Agreements with four Depositaries.  
Contrary to certain provisions in these agreements and how pre-release transactions were 
supposed to work under the Depositary Agreements, associated persons on ITG’s securities 
lending desk had an ongoing practice of obtaining, and then lending, pre-released ADRs from 
Depositaries without taking reasonable steps to determine whether the requisite number of 
ordinary shares was owned and custodied by the person on whose behalf the pre-released ADRs 
were being obtained.  The result of this conduct was the issuance of ADRs that in many instances 
were not backed by ordinary shares as required by the Depositary Agreements.  This conduct 
violated Section 17(a)(3) of the Securities Act. 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  
 
2
  The deposited securities typically are equity securities, but debt securities may also 
underlie ADRs. 

 3 
5. In addition, ITG failed to establish and implement effective policies and 
procedures to address whether ITG’s associated persons complied with the firm’s obligations in 
connection with pre-release transactions, such as determining ownership of the underlying 
ordinary shares.  As a result, ITG’s supervisory policies and procedures were not reasonably 
designed and implemented to provide effective oversight of associated persons to prevent and 
detect their violations of Securities Act Section 17(a)(3), and ITG failed reasonably to supervise 
its associated persons within the meaning of Section 15(b)(4)(E) of the Exchange Act. 
Respondent 
 
6. ITG, a Delaware corporation, is registered with the Commission as a broker-dealer, 
and its principal executive offices are in New York, New York.  ITG is a wholly owned subsidiary 
of Investment Technology Group, Inc., a publicly traded corporation whose equity securities are 
registered with the Commission pursuant to Section 12(b) of the Exchange Act and listed on the 
New York Stock Exchange.   
Background 
 
ADRs and the Pre-Release of ADRs 
 
7. ADRs are negotiable instruments that represent an ownership interest in a 
specified number of foreign securities that have been deposited with a Depositary by the holder 
of those securities.  ADRs may be traded on U.S. stock exchanges or over the counter.  The 
owner of an ADR has the right to obtain the underlying foreign securities by withdrawing them 
from the ADR facility.
3
  
8. An ADR is either “sponsored” or “unsponsored.”  If the ADR is sponsored, the 
Depositary Agreement is among the foreign company whose securities are represented by the 
ADRs (i.e., the sponsor), the Depositary, and ADR holders.  If the ADR is unsponsored, the 
Depositary Agreement is between the Depositary and the ADR holders.
4
  In either case, the 
Depositary Agreement will describe fees applicable to the ADRs and the party responsible for 
paying those fees.  In either case, the Depositary establishing the ADR files a Securities Act 
registration statement on Form F-6 with the Commission, which includes the Depositary 
Agreement as an exhibit.  
                                                 
3
  In a more technical sense, ADRs evidence American Depositary Shares, or ADSs, which 
represent the specific number of underlying ordinary shares of the same company on deposit 
with the Custodian in the foreign issuer’s home market.  In addition, an ADR for a particular 
company may actually represent one ordinary share, more than one ordinary share, or a fraction 
of an ordinary share.  The ADR-to-ordinary share ratio varies by company, based on pricing in 
the foreign and U.S. markets. 
 
4
  An unsponsored ADR is created by the Depositary and does not involve the formal 
participation (or require the agreement) of the foreign company whose securities the ADRs 
represent. 

 4 
9. Typically, when ADRs are issued, a specified number of the ordinary shares 
represented by the ADR are contemporaneously delivered to the Custodian.  In this way, those 
ordinary shares (“Deposited Shares”) are removed from the market.   
10. In some situations, a person may seek to obtain ADRs through a “pre-release” 
transaction, which is provided for in the Depositary Agreements and Pre-Release 
Agreements.  In pre-release transactions, a market participant obtains newly issued ADRs from 
the Depositary (as opposed to purchasing existing ADRs on the market) before that participant 
delivers the corresponding ordinary shares to the Custodian.  The traditional rationale for pre-
release transactions was to address settlement timing disparities in jurisdictions that could delay 
delivery to the Custodian of recently-purchased ordinary shares.  In theory, the pre-release 
transaction would be closed in short order once the ordinary shares were delivered to the 
Custodian.  Once issued, pre-released ADRs are indistinguishable from other ADRs of the same 
issuer and can be freely traded, even while the pre-release transaction remains open. 
11. Depositary Agreements and Pre-Release Agreements govern the terms of pre-
release transactions.  Brokers with Pre-Release Agreements (“Pre-Release Brokers”) may obtain 
pre-released ADRs directly from Depositaries.    
12. The Depositary Agreement and Pre-Release Agreement typically require a 
representation that, in connection with each pre-release transaction, the person to whom pre-
released ADRs are to be delivered, or that person’s customer, (i) owns the ordinary shares to be 
remitted, (ii) assigns all beneficial rights, title, and interest in the shares to the Depositary, and 
(iii) will not take any action with respect to such shares that is inconsistent with the transfer of 
beneficial ownership (collectively, the “Pre-Release Representations”).  In effect, the person, or 
the customer on whose behalf the person is acting, must agree to custody the ordinary shares for 
the benefit of ADR holders, similar to how the Depositary custodies the ordinary shares in 
issuing ADRs that are not pre-released.   
13. Depositary Agreements and Pre-Release Agreements also include provisions 
addressing the situation where ADRs have been pre-released over a dividend record date.  The 
provisions typically require the person on whose behalf the pre-released ADR is obtained to 
ensure withholding taxes to the extent due were paid on the dividend to the foreign jurisdiction at 
the rate required for ADR holders, to forward to the Depositary all dividends received from their 
corresponding ordinary shares, net of any withholding tax paid, and to pass through any tax 
credits or refunds from the dividends to the Depositary.  In this way, the rights and obligations of 
anyone who ends up holding the pre-released ADR will be protected, and the flow of dividend 
and tax payments will not be altered by the fact that the ordinary shares had not been 
simultaneously deposited with the Custodian when the pre-released ADR was issued.    
14. Significantly, these agreements are intended to ensure that, at all times until the 
pre-release position is closed by delivery of the ordinary shares (or an equivalent number of 
ADRs), the Custodian and the Pre-Release Broker (or its customer) are collectively holding in 
custody, for the benefit of ADR holders, the number of ordinary shares that corresponds to the 
issued ADRs.  This ensures that the total number of ordinary shares plus shares represented by 
ADRs available on the markets is constant, and that any economic or tax impact related to 

 5 
holding the ordinary shares flows to the Depositary and the ADR holders for whose benefit the 
Depositary custodies ordinary shares.    
ITG’s Pre-Release Practices 
 
15. At all relevant times, ITG did not custody securities. 
16. From at least 2011 through September 2014, ITG developed a matched book 
securities lending operation, whereby ITG obtained securities from a bank or broker-dealer and 
in turn lent them to another broker-dealer.  During the relevant period, ITG had Pre-Release 
Agreements with four Depositaries.  Pursuant to those agreements, ITG had a practice of 
obtaining ADRs through pre-release transactions with Depositaries and lending those ADRs to 
broker-dealer counterparties.  ITG profited from these transactions by obtaining the pre-released 
ADRs from Depositaries at lower rates than the rates at which they lent them to other brokers. 
17. ITG’s matched book securities lending operation was not core to ITG’s broker-
dealer activities, and represented less than 1% of the firm’s total annual revenues for 2011 
through 2014.  Approximately 73% of ITG’s matched book securities lending revenues during 
this time were generated from pre-release transactions.   
18. In connection with the Pre-Release Agreements, Depositaries A, B, and C 
required ITG to sign certifications (“Certifications”) stating that it was complying with the terms 
of the Pre-Release Agreements.  For the period 2009 through 2014, ITG supervisors signed a 
total of 10 such Certifications.   
19. Despite the obligations provided for in the Pre-Release Agreements and 
Certifications, ITG was negligent in failing to take reasonable steps to determine whether it 
complied with the Pre-Release Representations.   
20. ITG itself did not own ordinary shares in connection with any pre-release 
transaction with a Depositary.  Nor did ITG take reasonable steps to determine whether the 
broker-dealer counterparties to whom it lent the pre-released ADRs (or their customers) owned 
corresponding ordinary shares. 
21. Instead, ITG securities lending personnel routinely obtained pre-released ADRs 
through the Pre-Release Agreements and then lent them to counterparties pursuant to standard 
master securities loan agreements (“MSLAs”).  The MSLAs do not address pre-released ADRs, 
and did not contain any provisions requiring compliance with any of the Pre-Release 
Representations.   
22. In addition, ITG’s securities lending personnel did not seek confirmation that its 
counterparty (or its customer) owned and would appropriately custody ordinary shares in 
connection with a pre-release transaction. 
23. In effect, ITG securities lending personnel treated the pre-released ADRs as if 
they were ordinary shares used in typical securities lending transactions.  Accordingly, ITG 
securities lending personnel routinely obtained pre-released ADRs without taking any steps to 

 6 
comply with the Pre-Release Representations.  Moreover, given the circumstances in which ITG 
obtained and lent pre-released ADRs, ITG securities lending personnel should have recognized 
the likelihood that ITG was acting as a conduit through which its counterparties were obtaining 
and the Depositaries were issuing ADRs that were not evidenced by any ordinary shares held for 
the benefit of the Depositary.   
24. ITG’s securities lending personnel typically sought pre-released ADRs from 
Depositaries for two primary reasons.   
25. First, from January 2011 through September 2014, ITG securities lending 
personnel obtained, on a regular basis, pre-released ADRs of numerous securities and lent them 
to other broker-dealers that were looking to fulfill settlement obligations.  Based on the nature of 
the broker-dealers’ requests to borrow from ITG, and the fact that the requests often were for 
ADRs that were hard-to-borrow at the time, ITG’s securities lending personnel should have 
recognized that the requests at times may have arisen from circumstances involving broker-
dealers needing to obtain ADRs in order to make delivery on short sales, avoid fails to deliver, or 
comply with the close-out requirements in Regulation SHO Rule 204.  None of those 
circumstances would indicate that the broker-dealers to whom ITG was lending the pre-released 
ADRs owned or had custody of the underlying ordinary shares.  As a result, ITG failed to take 
reasonable steps to comply with the Pre-Release Representations in connection with these 
transactions.   
26. Similarly, ITG at times used the ability to obtain pre-released ADRs from 
Depositaries to assist broker-dealers that were seeking to locate shares pursuant to Rule 203 of 
Regulation SHO, in connection with potential short-selling activity.  When providing such 
assistance, ITG failed to take reasonable steps to determine whether it would have been able to 
comply with the Pre-Release Representations.   
27. As a result of this conduct, ITG, at times, facilitated short selling and enabled the 
settlement of trades with ADRs that were not actually backed by ordinary shares held for the 
benefit of the Depositary in accordance with the terms of the Pre-Release Agreements.   
28.   Second, from January 2011 through September 2014, ITG securities lending 
personnel engaged in hundreds of pre-release transactions involving the sponsored ADRs of 
foreign issuers that were scheduled to pay dividends.  ITG’s counterparties (the brokers to whom 
ITG lent the pre-released ADRs) and other parties (such as the counterparties’ customers or 
counterparties’ counterparties) sought to profit by holding ordinary shares in a tax advantaged 
situation if the tax savings were higher than the costs of borrowing or acquiring the ordinary 
shares at dividend time.  ITG, in turn, profited from these transactions by lending the pre-
released ADRs at a higher rate than the rate at which it obtained ADRs from the Depositary. 
29. Pursuant to the Depositary Agreements and Pre-Release Agreements, the payment 
of dividends to ADR holders, and tax payments to foreign tax authorities, should have been 
unaffected by the pre-release of ADRs if all relevant parties were fulfilling their obligations 
under those agreements.  ITG securities lending personnel were supposed to have ensured that 
the dividend payments on ordinary shares that would otherwise have been received by the 

 7 
Depositary’s Custodian (i.e., where there was no pre-release transaction) were forwarded from 
ITG’s borrower, to ITG, and on to the Depositary.  In addition, the applicable foreign tax 
withholding on that dividend was supposed to have been calculated as if the Depositary owned 
and held such shares for the benefit of a U.S. resident holder of ADRs with no other equity 
interest in the issuer, with ITG representing that the applicable foreign withholding tax would be 
paid.  Thus, all ADR holders on the relevant record date would, despite the existence of pre-
released ADRs in the marketplace, (a) receive the dividend the holders were entitled to receive, 
net of withholding taxes; and (b) receive accurate information concerning the foreign taxes 
withheld on the dividends paid with respect to the ADRs.   
30. ITG forwarded the correct dividend amounts to the Depositaries.  However, ITG’s 
securities lending personnel should have understood from the circumstances of many of the 
transactions that those amounts may not have originated from ordinary shares held at the time of 
the pre-release transaction, and that its borrowers may not have been making tax payments that, 
under the Pre-Release Agreements, should have been paid to the foreign jurisdiction.   
31. For example, ITG securities lending personnel were, or should have been, aware 
that ITG’s borrowing counterparties at times returned the pre-released ADRs to the Depositaries 
in exchange for ordinary shares – a fact that could indicate that any forwarding of dividend 
payments may have come from the ordinary shares obtained from the pre-released ADRs 
themselves, rather than from any ordinary shares previously owned by the borrower.   
32. ITG securities lending personnel typically lent pre-released ADRs before record 
date at rates that, when paid over an agreed upon term, in effect approximated the amount of the 
dividend that the borrower was willing to pay in order to obtain the ADRs.  That is, if a standard 
U.S. taxpayer would only receive a net 85% of a dividend, with 15% being paid as withholding 
tax to the foreign jurisdiction, but the borrower (or its customer) qualified for 0% withholding, 
the borrower might be willing to pay, for example, a rate that when paid over an agreed upon 
term was roughly equal to a percentage of the dividend that was not withheld in order to borrow 
the pre-released ADRs.  And ITG, in turn, would be willing to lend the pre-released ADRs at that 
rate if it could obtain them for less from a Depositary.     
33. ITG structured these dividend-related pre-release and corresponding lending 
transactions with the help of worksheets that included an “agreed dividend percentage,” which 
was an input used to calculate the daily rebate rate that ITG was willing to pay a Depositary and 
the daily rebate rate that ITG sought from counterparties.  In one specific example, in May 2014, 
Depositary A issued the ADRs of a French issuer (“Issuer A”) through pre-release transactions 
with ITG.  At this time, the tax treaties with France provided for a default statutory withholding 
rate of 30% for ADR holders.  Depositary A and ITG entered into pre-release transactions 
through which ITG obtained 750,000 ADRs from Depositary A; ITG then loaned those ADRs to 
a counterparty (“Counterparty A”).  As reflected on the worksheets, Counterparty A agreed to an 
“agreed dividend percentage” of approximately 87% over the periods in which the transactions 
were to remain open, and ITG and Depositary A agreed to an “agreed dividend percentage” of 
78.25% over the same periods.  In this example, Counterparty A would retain approximately 
13% of the dividend (or 100% less 87%) and pay ITG a rebate rate that approximated 17% of the 
dividend, and ITG would pay the Depositary a rebate rate that approximated 8.25% of the 

 8 
dividend, such that ITG made a spread that approximated 8.75%  of the dividend (87% less 
78.25%).  Post-dividend, as was often the case, Counterparty A delivered ADRs to ITG to close 
out its loan and ITG then delivered the ADRs to Depositary A to close out the pre-release 
transactions. 
34. ITG lent the pre-released ADRs in dividend-related transactions pursuant to the 
MSLAs, which provided for no requirement of payment of withholding taxes to foreign 
jurisdictions.  ITG’s securities lending personnel should therefore have known that ITG’s 
borrowers may not have been paying withholding taxes that may have been owed to the foreign 
jurisdiction on dividends received on ordinary shares, and that ordinary shares were not properly 
custodied for the benefit of ADR holders.   
35. ITG failed to establish and implement policies and procedures that would be 
reasonably expected to determine whether its associated persons on the securities lending desk 
complied with the Pre-Release Representations in connection with pre-release transactions.     
36. From 2011 through September 2014, ITG’s net revenues from the pre-release 
transactions described above totaled approximately $15 million. 
37. In September 2014, following the commencement of the Commission’s 
investigation into this conduct, ITG voluntarily suspended its pre-release activity pending further 
review.  Subsequently, it permanently ended this activity in late 2014.  
38. Throughout the staff’s investigation, ITG voluntarily met with staff on multiple 
occasions and provided detailed factual summaries of relevant information. 
39. During the staff’s investigation, ITG’s parent company added three new directors 
to its board and ITG appointed new senior management that voluntarily implemented remedial 
measures aimed at preventing similar conduct from occurring again.  Such measures include the 
creation of a new Global Risk Committee to promote compliance policies and address the 
various risks presented by ITG’s global activities; a review of training curriculum; and location 
of the firm’s global chief compliance officer on the trading floor.  
Violations 
40. As result of the conduct described above, Respondent willfully
5
 violated Section 
17(a)(3) of the Securities Act, which prohibits, in the offer or sale of securities, engaging in any 
transaction, practice, or course of business which operates or would operate as a fraud or deceit 
upon the purchaser. 
                                                 
5
  A willful violation of the securities laws means merely “‘that the person charged with the 
duty knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting 
Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor 
“‘also be aware that he is violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. 
v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 

 9 
41. Under Section 15(b)(4)(E) of the Exchange Act, broker-dealers are responsible 
for supervising, with a view to preventing and detecting violations of the federal securities laws, 
persons subject to their supervision.  ITG was responsible for supervising its securities lending 
personnel to address whether they were complying with the Pre-Release Representations.  ITG 
failed reasonably to fulfill such supervisory responsibilities within the meaning of Section 
15(b)(4)(E) of the Exchange Act because ITG failed to establish reasonable policies and 
procedures, and a system for implementing such policies and procedures, that would reasonably be 
expected to prevent and detect the violations of Section 17(a)(3) of the Securities Act by the 
associated persons on the securities lending desk described above.  If ITG had developed 
reasonable policies and procedures and systems to implement those procedures, it is likely that the 
firm would have prevented and detected the violations of its associated persons on the securities 
lending desk. 
ITG’s Remedial Efforts 
 
42. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent and cooperation afforded the Commission staff.  
IV. 
 
 In view of the foregoing, the Commission deems it appropriate, in the public interest, to 
impose the sanctions agreed to in ITG’s Offer. 
 
 Accordingly, pursuant to Section 8A of the Securities Act, and Section 15(b) of the 
Exchange Act, it is hereby ORDERED that: 
 
A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a)(3) of the Securities Act. 
 
B. Respondent is censured. 
 
C. ITG shall, within 30 days of the entry of this Order, pay disgorgement of 
$15,070,144.10 and prejudgment interest of $1,845,252.36 to the Securities and Exchange 
Commission for transfer to the general fund of the United States Treasury, subject to  Exchange 
Act Section 21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 
SEC Rule of Practice 600. 
 
D. ITG shall, within 30 days of the entry of this Order, pay a civil money penalty in 
the amount of $7,535,072.05 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  

 10 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying ITG 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Sanjay Wadhwa, Senior Associate Director, 
Division of Enforcement, Securities and Exchange Commission, 200 Vesey Street, New York, NY 
10281.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
  
F.   Respondent acknowledges that the Commission is not imposing a civil penalty in 
excess of $7,535,072.05 based upon its cooperation and agreement to cooperate in a Commission 
investigation and related enforcement action.  If at any time following the entry of the Order, the 
Division of Enforcement (“Division”) obtains information indicating that Respondent knowingly 
provided materially false or misleading information or materials to the Commission, or in a related 
proceeding, the Division may, at its sole discretion and with prior notice to the Respondent, 
petition the Commission to reopen this matter and seek an order directing that the Respondent pay 
an additional civil penalty.  Respondent may contest by way of defense in any resulting 
administrative proceeding whether it knowingly provided materially false or misleading 

 11 
information, but may not:  (1) contest the findings in the Order; or (2) assert any defense to liability 
or remedy, including, but not limited to, any statute of limitations defense. 
 
 
 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 
 

SECURITIES ACT OF 1933 

Release No. 10279 / January 12, 2017 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 79776 / January 12, 2017 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17770 

 

In the Matter of 

 

ITG Inc.  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTION 8A OF THE 

SECURITIES ACT OF 1933, AND SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS AND A 

CEASE-AND-DESIST ORDER  

   

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”) and Section 15(b) 

of the Securities Exchange Act of 1934 (“Exchange Act”), against ITG Inc. (“ITG” or 

“Respondent”).   

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 

1933, and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing 

Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 

 

 

 

 



 2 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:   

 

Summary 
 

1. These proceedings arise out of ITG’s improper practices involving the pre-release 

of American Depositary Receipts (“ADRs”).  ADRs allow U.S. investors to invest in foreign 

companies without having to purchase the shares in the foreign markets, and allow foreign 

companies to get increased exposure to U.S. markets. 

2. ADR facilities, which provide for the issuance of ADRs, are established by a 

depositary bank (the “Depositary”) pursuant to a depositary agreement (“Depositary 

Agreement”).   

3. Typically, a Depositary delivers ADRs to a market participant who delivers the 

corresponding number of foreign securities to the Depositary’s foreign custodian 

(“Custodian”).  However, in certain situations, Depositary Agreements may provide for a “pre-

release” transaction, in which an investor can obtain newly issued ADRs from the Depositary 

when the foreign securities have been purchased but prior to their delivery to the 

Custodian.2  Such pre-released ADRs can only be obtained by parties, typically brokers, that 

have entered into pre-release agreements (“Pre-Release Agreements”) with the Depositaries.  

The Pre-Release Agreements, consistent with the Depositary Agreements, require the broker 

receiving the pre-released ADRs (or its customer on whose behalf the broker is acting) to own 

the ordinary shares that evidence the ADRs, and to assign all beneficial right, title, and interest in 

those ordinary shares to the Depositary while the pre-release transaction is outstanding.  In 

effect, the broker or its customer becomes the temporary custodian of the ordinary shares that 

would otherwise have been delivered to the Custodian.  

4. Since at least 2011, ITG had Pre-Release Agreements with four Depositaries.  

Contrary to certain provisions in these agreements and how pre-release transactions were 

supposed to work under the Depositary Agreements, associated persons on ITG’s securities 

lending desk had an ongoing practice of obtaining, and then lending, pre-released ADRs from 

Depositaries without taking reasonable steps to determine whether the requisite number of 

ordinary shares was owned and custodied by the person on whose behalf the pre-released ADRs 

were being obtained.  The result of this conduct was the issuance of ADRs that in many instances 

were not backed by ordinary shares as required by the Depositary Agreements.  This conduct 

violated Section 17(a)(3) of the Securities Act. 

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  

 
2  The deposited securities typically are equity securities, but debt securities may also 

underlie ADRs. 



 3 

5. In addition, ITG failed to establish and implement effective policies and 

procedures to address whether ITG’s associated persons complied with the firm’s obligations in 

connection with pre-release transactions, such as determining ownership of the underlying 

ordinary shares.  As a result, ITG’s supervisory policies and procedures were not reasonably 

designed and implemented to provide effective oversight of associated persons to prevent and 

detect their violations of Securities Act Section 17(a)(3), and ITG failed reasonably to supervise 

its associated persons within the meaning of Section 15(b)(4)(E) of the Exchange Act. 

Respondent 

 

6. ITG, a Delaware corporation, is registered with the Commission as a broker-dealer, 

and its principal executive offices are in New York, New York.  ITG is a wholly owned subsidiary 

of Investment Technology Group, Inc., a publicly traded corporation whose equity securities are 

registered with the Commission pursuant to Section 12(b) of the Exchange Act and listed on the 

New York Stock Exchange.   

Background 

 

ADRs and the Pre-Release of ADRs 

 

7. ADRs are negotiable instruments that represent an ownership interest in a 

specified number of foreign securities that have been deposited with a Depositary by the holder 

of those securities.  ADRs may be traded on U.S. stock exchanges or over the counter.  The 

owner of an ADR has the right to obtain the underlying foreign securities by withdrawing them 

from the ADR facility.
3
  

8. An ADR is either “sponsored” or “unsponsored.”  If the ADR is sponsored, the 

Depositary Agreement is among the foreign company whose securities are represented by the 

ADRs (i.e., the sponsor), the Depositary, and ADR holders.  If the ADR is unsponsored, the 

Depositary Agreement is between the Depositary and the ADR holders.4  In either case, the 

Depositary Agreement will describe fees applicable to the ADRs and the party responsible for 

paying those fees.  In either case, the Depositary establishing the ADR files a Securities Act 

registration statement on Form F-6 with the Commission, which includes the Depositary 

Agreement as an exhibit.  

                                                 
3  In a more technical sense, ADRs evidence American Depositary Shares, or ADSs, which 

represent the specific number of underlying ordinary shares of the same company on deposit 

with the Custodian in the foreign issuer’s home market.  In addition, an ADR for a particular 

company may actually represent one ordinary share, more than one ordinary share, or a fraction 

of an ordinary share.  The ADR-to-ordinary share ratio varies by company, based on pricing in 

the foreign and U.S. markets. 

 
4  An unsponsored ADR is created by the Depositary and does not involve the formal 

participation (or require the agreement) of the foreign company whose securities the ADRs 

represent. 



 4 

9. Typically, when ADRs are issued, a specified number of the ordinary shares 

represented by the ADR are contemporaneously delivered to the Custodian.  In this way, those 

ordinary shares (“Deposited Shares”) are removed from the market.   

10. In some situations, a person may seek to obtain ADRs through a “pre-release” 

transaction, which is provided for in the Depositary Agreements and Pre-Release 

Agreements.  In pre-release transactions, a market participant obtains newly issued ADRs from 

the Depositary (as opposed to purchasing existing ADRs on the market) before that participant 

delivers the corresponding ordinary shares to the Custodian.  The traditional rationale for pre-

release transactions was to address settlement timing disparities in jurisdictions that could delay 

delivery to the Custodian of recently-purchased ordinary shares.  In theory, the pre-release 

transaction would be closed in short order once the ordinary shares were delivered to the 

Custodian.  Once issued, pre-released ADRs are indistinguishable from other ADRs of the same 

issuer and can be freely traded, even while the pre-release transaction remains open. 

11. Depositary Agreements and Pre-Release Agreements govern the terms of pre-

release transactions.  Brokers with Pre-Release Agreements (“Pre-Release Brokers”) may obtain 

pre-released ADRs directly from Depositaries.    

12. The Depositary Agreement and Pre-Release Agreement typically require a 

representation that, in connection with each pre-release transaction, the person to whom pre-

released ADRs are to be delivered, or that person’s customer, (i) owns the ordinary shares to be 

remitted, (ii) assigns all beneficial rights, title, and interest in the shares to the Depositary, and 

(iii) will not take any action with respect to such shares that is inconsistent with the transfer of 

beneficial ownership (collectively, the “Pre-Release Representations”).  In effect, the person, or 

the customer on whose behalf the person is acting, must agree to custody the ordinary shares for 

the benefit of ADR holders, similar to how the Depositary custodies the ordinary shares in 

issuing ADRs that are not pre-released.   

13. Depositary Agreements and Pre-Release Agreements also include provisions 

addressing the situation where ADRs have been pre-released over a dividend record date.  The 

provisions typically require the person on whose behalf the pre-released ADR is obtained to 

ensure withholding taxes to the extent due were paid on the dividend to the foreign jurisdiction at 

the rate required for ADR holders, to forward to the Depositary all dividends received from their 

corresponding ordinary shares, net of any withholding tax paid, and to pass through any tax 

credits or refunds from the dividends to the Depositary.  In this way, the rights and obligations of 

anyone who ends up holding the pre-released ADR will be protected, and the flow of dividend 

and tax payments will not be altered by the fact that the ordinary shares had not been 

simultaneously deposited with the Custodian when the pre-released ADR was issued.    

14. Significantly, these agreements are intended to ensure that, at all times until the 

pre-release position is closed by delivery of the ordinary shares (or an equivalent number of 

ADRs), the Custodian and the Pre-Release Broker (or its customer) are collectively holding in 

custody, for the benefit of ADR holders, the number of ordinary shares that corresponds to the 

issued ADRs.  This ensures that the total number of ordinary shares plus shares represented by 

ADRs available on the markets is constant, and that any economic or tax impact related to 



 5 

holding the ordinary shares flows to the Depositary and the ADR holders for whose benefit the 

Depositary custodies ordinary shares.    

ITG’s Pre-Release Practices 

 

15. At all relevant times, ITG did not custody securities. 

16. From at least 2011 through September 2014, ITG developed a matched book 

securities lending operation, whereby ITG obtained securities from a bank or broker-dealer and 

in turn lent them to another broker-dealer.  During the relevant period, ITG had Pre-Release 

Agreements with four Depositaries.  Pursuant to those agreements, ITG had a practice of 

obtaining ADRs through pre-release transactions with Depositaries and lending those ADRs to 

broker-dealer counterparties.  ITG profited from these transactions by obtaining the pre-released 

ADRs from Depositaries at lower rates than the rates at which they lent them to other brokers. 

17. ITG’s matched book securities lending operation was not core to ITG’s broker-

dealer activities, and represented less than 1% of the firm’s total annual revenues for 2011 

through 2014.  Approximately 73% of ITG’s matched book securities lending revenues during 

this time were generated from pre-release transactions.   

18. In connection with the Pre-Release Agreements, Depositaries A, B, and C 

required ITG to sign certifications (“Certifications”) stating that it was complying with the terms 

of the Pre-Release Agreements.  For the period 2009 through 2014, ITG supervisors signed a 

total of 10 such Certifications.   

19. Despite the obligations provided for in the Pre-Release Agreements and 

Certifications, ITG was negligent in failing to take reasonable steps to determine whether it 

complied with the Pre-Release Representations.   

20. ITG itself did not own ordinary shares in connection with any pre-release 

transaction with a Depositary.  Nor did ITG take reasonable steps to determine whether the 

broker-dealer counterparties to whom it lent the pre-released ADRs (or their customers) owned 

corresponding ordinary shares. 

21. Instead, ITG securities lending personnel routinely obtained pre-released ADRs 

through the Pre-Release Agreements and then lent them to counterparties pursuant to standard 

master securities loan agreements (“MSLAs”).  The MSLAs do not address pre-released ADRs, 

and did not contain any provisions requiring compliance with any of the Pre-Release 

Representations.   

22. In addition, ITG’s securities lending personnel did not seek confirmation that its 

counterparty (or its customer) owned and would appropriately custody ordinary shares in 

connection with a pre-release transaction. 

23. In effect, ITG securities lending personnel treated the pre-released ADRs as if 

they were ordinary shares used in typical securities lending transactions.  Accordingly, ITG 

securities lending personnel routinely obtained pre-released ADRs without taking any steps to 



 6 

comply with the Pre-Release Representations.  Moreover, given the circumstances in which ITG 

obtained and lent pre-released ADRs, ITG securities lending personnel should have recognized 

the likelihood that ITG was acting as a conduit through which its counterparties were obtaining 

and the Depositaries were issuing ADRs that were not evidenced by any ordinary shares held for 

the benefit of the Depositary.   

24. ITG’s securities lending personnel typically sought pre-released ADRs from 

Depositaries for two primary reasons.   

25. First, from January 2011 through September 2014, ITG securities lending 

personnel obtained, on a regular basis, pre-released ADRs of numerous securities and lent them 

to other broker-dealers that were looking to fulfill settlement obligations.  Based on the nature of 

the broker-dealers’ requests to borrow from ITG, and the fact that the requests often were for 

ADRs that were hard-to-borrow at the time, ITG’s securities lending personnel should have 

recognized that the requests at times may have arisen from circumstances involving broker-

dealers needing to obtain ADRs in order to make delivery on short sales, avoid fails to deliver, or 

comply with the close-out requirements in Regulation SHO Rule 204.  None of those 

circumstances would indicate that the broker-dealers to whom ITG was lending the pre-released 

ADRs owned or had custody of the underlying ordinary shares.  As a result, ITG failed to take 

reasonable steps to comply with the Pre-Release Representations in connection with these 

transactions.   

26. Similarly, ITG at times used the ability to obtain pre-released ADRs from 

Depositaries to assist broker-dealers that were seeking to locate shares pursuant to Rule 203 of 

Regulation SHO, in connection with potential short-selling activity.  When providing such 

assistance, ITG failed to take reasonable steps to determine whether it would have been able to 

comply with the Pre-Release Representations.   

27. As a result of this conduct, ITG, at times, facilitated short selling and enabled the 

settlement of trades with ADRs that were not actually backed by ordinary shares held for the 

benefit of the Depositary in accordance with the terms of the Pre-Release Agreements.   

28.   Second, from January 2011 through September 2014, ITG securities lending 

personnel engaged in hundreds of pre-release transactions involving the sponsored ADRs of 

foreign issuers that were scheduled to pay dividends.  ITG’s counterparties (the brokers to whom 

ITG lent the pre-released ADRs) and other parties (such as the counterparties’ customers or 

counterparties’ counterparties) sought to profit by holding ordinary shares in a tax advantaged 

situation if the tax savings were higher than the costs of borrowing or acquiring the ordinary 

shares at dividend time.  ITG, in turn, profited from these transactions by lending the pre-

released ADRs at a higher rate than the rate at which it obtained ADRs from the Depositary. 

29. Pursuant to the Depositary Agreements and Pre-Release Agreements, the payment 

of dividends to ADR holders, and tax payments to foreign tax authorities, should have been 

unaffected by the pre-release of ADRs if all relevant parties were fulfilling their obligations 

under those agreements.  ITG securities lending personnel were supposed to have ensured that 

the dividend payments on ordinary shares that would otherwise have been received by the 



 7 

Depositary’s Custodian (i.e., where there was no pre-release transaction) were forwarded from 

ITG’s borrower, to ITG, and on to the Depositary.  In addition, the applicable foreign tax 

withholding on that dividend was supposed to have been calculated as if the Depositary owned 

and held such shares for the benefit of a U.S. resident holder of ADRs with no other equity 

interest in the issuer, with ITG representing that the applicable foreign withholding tax would be 

paid.  Thus, all ADR holders on the relevant record date would, despite the existence of pre-

released ADRs in the marketplace, (a) receive the dividend the holders were entitled to receive, 

net of withholding taxes; and (b) receive accurate information concerning the foreign taxes 

withheld on the dividends paid with respect to the ADRs.   

30. ITG forwarded the correct dividend amounts to the Depositaries.  However, ITG’s 

securities lending personnel should have understood from the circumstances of many of the 

transactions that those amounts may not have originated from ordinary shares held at the time of 

the pre-release transaction, and that its borrowers may not have been making tax payments that, 

under the Pre-Release Agreements, should have been paid to the foreign jurisdiction.   

31. For example, ITG securities lending personnel were, or should have been, aware 

that ITG’s borrowing counterparties at times returned the pre-released ADRs to the Depositaries 

in exchange for ordinary shares – a fact that could indicate that any forwarding of dividend 

payments may have come from the ordinary shares obtained from the pre-released ADRs 

themselves, rather than from any ordinary shares previously owned by the borrower.   

32. ITG securities lending personnel typically lent pre-released ADRs before record 

date at rates that, when paid over an agreed upon term, in effect approximated the amount of the 

dividend that the borrower was willing to pay in order to obtain the ADRs.  That is, if a standard 

U.S. taxpayer would only receive a net 85% of a dividend, with 15% being paid as withholding 

tax to the foreign jurisdiction, but the borrower (or its customer) qualified for 0% withholding, 

the borrower might be willing to pay, for example, a rate that when paid over an agreed upon 

term was roughly equal to a percentage of the dividend that was not withheld in order to borrow 

the pre-released ADRs.  And ITG, in turn, would be willing to lend the pre-released ADRs at that 

rate if it could obtain them for less from a Depositary.     

33. ITG structured these dividend-related pre-release and corresponding lending 

transactions with the help of worksheets that included an “agreed dividend percentage,” which 

was an input used to calculate the daily rebate rate that ITG was willing to pay a Depositary and 

the daily rebate rate that ITG sought from counterparties.  In one specific example, in May 2014, 

Depositary A issued the ADRs of a French issuer (“Issuer A”) through pre-release transactions 

with ITG.  At this time, the tax treaties with France provided for a default statutory withholding 

rate of 30% for ADR holders.  Depositary A and ITG entered into pre-release transactions 

through which ITG obtained 750,000 ADRs from Depositary A; ITG then loaned those ADRs to 

a counterparty (“Counterparty A”).  As reflected on the worksheets, Counterparty A agreed to an 

“agreed dividend percentage” of approximately 87% over the periods in which the transactions 

were to remain open, and ITG and Depositary A agreed to an “agreed dividend percentage” of 

78.25% over the same periods.  In this example, Counterparty A would retain approximately 

13% of the dividend (or 100% less 87%) and pay ITG a rebate rate that approximated 17% of the 

dividend, and ITG would pay the Depositary a rebate rate that approximated 8.25% of the 



 8 

dividend, such that ITG made a spread that approximated 8.75%  of the dividend (87% less 

78.25%).  Post-dividend, as was often the case, Counterparty A delivered ADRs to ITG to close 

out its loan and ITG then delivered the ADRs to Depositary A to close out the pre-release 

transactions. 

34. ITG lent the pre-released ADRs in dividend-related transactions pursuant to the 

MSLAs, which provided for no requirement of payment of withholding taxes to foreign 

jurisdictions.  ITG’s securities lending personnel should therefore have known that ITG’s 

borrowers may not have been paying withholding taxes that may have been owed to the foreign 

jurisdiction on dividends received on ordinary shares, and that ordinary shares were not properly 

custodied for the benefit of ADR holders.   

35. ITG failed to establish and implement policies and procedures that would be 

reasonably expected to determine whether its associated persons on the securities lending desk 

complied with the Pre-Release Representations in connection with pre-release transactions.     

36. From 2011 through September 2014, ITG’s net revenues from the pre-release 

transactions described above totaled approximately $15 million. 

37. In September 2014, following the commencement of the Commission’s 

investigation into this conduct, ITG voluntarily suspended its pre-release activity pending further 

review.  Subsequently, it permanently ended this activity in late 2014.  

38. Throughout the staff’s investigation, ITG voluntarily met with staff on multiple 

occasions and provided detailed factual summaries of relevant information. 

39. During the staff’s investigation, ITG’s parent company added three new directors 

to its board and ITG appointed new senior management that voluntarily implemented remedial 

measures aimed at preventing similar conduct from occurring again.  Such measures include the 

creation of a new Global Risk Committee to promote compliance policies and address the 

various risks presented by ITG’s global activities; a review of training curriculum; and location 

of the firm’s global chief compliance officer on the trading floor.  

Violations 

40. As result of the conduct described above, Respondent willfully5 violated Section 

17(a)(3) of the Securities Act, which prohibits, in the offer or sale of securities, engaging in any 

transaction, practice, or course of business which operates or would operate as a fraud or deceit 

upon the purchaser. 

                                                 
5  A willful violation of the securities laws means merely “‘that the person charged with the 

duty knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting 

Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor 

“‘also be aware that he is violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. 

v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 



 9 

41. Under Section 15(b)(4)(E) of the Exchange Act, broker-dealers are responsible 

for supervising, with a view to preventing and detecting violations of the federal securities laws, 

persons subject to their supervision.  ITG was responsible for supervising its securities lending 

personnel to address whether they were complying with the Pre-Release Representations.  ITG 

failed reasonably to fulfill such supervisory responsibilities within the meaning of Section 

15(b)(4)(E) of the Exchange Act because ITG failed to establish reasonable policies and 

procedures, and a system for implementing such policies and procedures, that would reasonably be 

expected to prevent and detect the violations of Section 17(a)(3) of the Securities Act by the 

associated persons on the securities lending desk described above.  If ITG had developed 

reasonable policies and procedures and systems to implement those procedures, it is likely that the 

firm would have prevented and detected the violations of its associated persons on the securities 

lending desk. 

ITG’s Remedial Efforts 

 

42. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Respondent and cooperation afforded the Commission staff.  

IV. 

 

 In view of the foregoing, the Commission deems it appropriate, in the public interest, to 

impose the sanctions agreed to in ITG’s Offer. 

 

 Accordingly, pursuant to Section 8A of the Securities Act, and Section 15(b) of the 

Exchange Act, it is hereby ORDERED that: 

 

A. Respondent cease and desist from committing or causing any violations and any 

future violations of Section 17(a)(3) of the Securities Act. 

 

B. Respondent is censured. 

 

C. ITG shall, within 30 days of the entry of this Order, pay disgorgement of 

$15,070,144.10 and prejudgment interest of $1,845,252.36 to the Securities and Exchange 

Commission for transfer to the general fund of the United States Treasury, subject to  Exchange 

Act Section 21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 

SEC Rule of Practice 600. 

 

D. ITG shall, within 30 days of the entry of this Order, pay a civil money penalty in 

the amount of $7,535,072.05 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   

 

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  



 10 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying ITG 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Sanjay Wadhwa, Senior Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 200 Vesey Street, New York, NY 

10281.   

 

 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

  

F.   Respondent acknowledges that the Commission is not imposing a civil penalty in 

excess of $7,535,072.05 based upon its cooperation and agreement to cooperate in a Commission 

investigation and related enforcement action.  If at any time following the entry of the Order, the 

Division of Enforcement (“Division”) obtains information indicating that Respondent knowingly 

provided materially false or misleading information or materials to the Commission, or in a related 

proceeding, the Division may, at its sole discretion and with prior notice to the Respondent, 

petition the Commission to reopen this matter and seek an order directing that the Respondent pay 

an additional civil penalty.  Respondent may contest by way of defense in any resulting 

administrative proceeding whether it knowingly provided materially false or misleading 

http://www.sec.gov/about/offices/ofm.htm


 11 

information, but may not:  (1) contest the findings in the Order; or (2) assert any defense to liability 

or remedy, including, but not limited to, any statute of limitations defense. 

 

 

 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary