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15 APRIL 2020

Nordic companies’ exposure to ADRs and the risk of facing US lawsuits

ADR

The theme of AIG Academy Connected's first webinar  was on how Nordic companies can be affected by American Depository Receipts (ADRs). The event was hosted by Mattias Fritz, Branch Manager AIG Sweden, and Nima Rafiee, Underwriting Manager for Financial Lines Europe, shared his expertise on the topic.

Until recently, companies have thought that the risk of facing lawsuits in the US under US securities law have been very low as long as they are not actively selling securities in the country. However, a recent decision by the US Court changed this belief, and today companies with unsponsored ADRs cannot longer avoid the potential risk of US securities claims.

“Many companies do not know about this risk, since they might not even know that they have unsponsored ADRs. It is the US investment banks that themselves issue these ADRs to US investors, who in the the worst case can file a lawsuit against the company. Regardless the outcome, this will mean very large defense costs for the company,” says Nima Rafiee.

This risk of facing lawsuits under the US securities law will not disappear in a near future. To learn more about the different types of ADRs, the ongoing US lawsuits that will impact companies as well as the exposure on Nordic companies, listen to the webinar through the link below.