Unsponsored ADRs Falling Through the Cracks: Adapting a Domestic Securities Regime to a Global Marketplace

Sarah Dotzel · 18 Vand. J. Ent. & Tech. 4

Abstract

Investing in the securities market has become a commonplace activity for expert and amateur investors alike. As more and more companies transcend national boundaries with their business activities, investment in their securities becomes coveted by international investors. Since securities are regulated on a country-by-country basis, it is unclear which law applies when conflict arises. In an attempt to clarify one such situation, simplify the application of US securities laws, and respect the legal regimes of other nations, the Morrison decision created an unclear test which leaves investors in unsponsored American Depositary Receipts (ADRs), one of the most common international trading mechanisms, completely unprotected by the laws of any securities regulatory regime. This Note proposes using existing infrastructure to facilitate the trade of unsponsored ADRs as a way to ensure both protection of investors and efficiency of the global securities market.