FT learned the trade in the U.S. securities sanctioned Russian companies


American brokerage unit of the Russian investment company “Opening the Capital” and BKS traded securities of Russian issuers who are in the sanctions list of SDN of the U.S. Treasury, says the Financial Times. Us regulators can deem it a violation of the sanctions regime, the FT said former senior adviser to OFAC (sanctions service of the U.S. Treasury) Adam Smith.

Registered in the U.S. Otkritie Capital U.S. Inc. and BCS Americas Inc. brokered transactions with shares of “Mostotrest” (subcontractor for construction of the Kerch bridge to Crimea) and Mosoblbank, controlled by the Rotenberg brothers, as well as ruble bonds of “Uralvagonzavod”, the FT article.

Both brokers are licensed American financial markets regulator FINRA, their offices are located in new York. And “Opening”, and BKS told the Financial Times he did not believe that they are subject to the jurisdiction of the United States in this matter. BKS told that “operates in strict accordance with Russian laws.” “Discovery” claims that among its customers are currently not U.S. citizens or U.S. legal entities, the company provides access to trading in securities “in full compliance with the requirements of laws,” including the prohibition of the U.S. Treasury on transactions with securities of the companies on the SDN list. The U.S. Treasury declined to comment on the issue.

Under the jurisdiction of the United States from the point of view of the obligation to comply with financial sanctions fall, the company established in accordance with us law, and any and all individuals and organizations physically located in the United States, the OFAC studied . Trading in securities of the companies on the SDN list, even in the secondary market may be prohibited. For example, in “Operational terms” American Depositary Depository Trust Company (DTC) said, “If the Issuer is listed in the OFAC SDN list, the securities of such Issuer not permitted to DTC services”. Financial market participants may be required to lock in their accounts of securities issued by the company under sanctions, even if such securities purchased on the secondary market, according to the presentation of the law firm Dechert on the website of the American chamber of Commerce in Russia.

Mostotrest, until 2015 owned by businessmen Arkady and Igor Rotenberg (now controlled by the structure, affiliated with Russian Railways) were included in the sanctions list on 1 September 2016, something that helps to build the Kerch bridge. At the same time, the U.S. Treasury issued a General license authorizing minority shareholders of Mostotrest, among which could be us funds to sell their shares to non-U.S. investors during the month.

“Mostotrest” in free circulation are less than 6% of the shares at Mosoblbank% and 1.7%, follows from materials of the companies.

The coming to power of Donald trump in the United States in November of 2016, expectations of partial withdrawal of sanctions against Russia, but so far no practical steps in this direction, the administration trump did not. Markets, apparently, has stopped to consider the prices of Russian assets, the potential easing of us sanctions, wrote this week in review, senior economist at Danske Bank Vladimir miklashevskii. However, the FT quotes an unnamed Russian broker, which says: “Sanctions don’t work, no one punishes those who does not obey them. Western banks asking us whether we keep sanctions regime, put a tick in their questionnaires and forget about it.”

Source