Sberbank, Gazprom, and Lukoil websites are blocked. FINRA halts trading in $SBRCY, $OGZPY, and $LUKOY, seeks more information from companies following economic sanctions on Russia.

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by Law_And_Politics

This is not legal advice and I am not your attorney.

TL;DR: It appears there are no real restrictions on trading or owning Sberbank and Gazprom ADRs under current sanctions. Market-makers and brokers began halting buying in Russian equities days ago before FINRA formally suspended trading 15 minutes into today’s session. Why was buying blocked before FINRA’s intervention if transacting in the stocks is not impermissible under current sanctions?

Attempts to reach the Sberbank, Gazprom, and Lukoil websites from VPNs in the Netherlands, the U.S., and Japan were unsuccessful. March 3, 2022, 2030 CET.

Source for FINRA trading halt:

finance.yahoo.com/news/wall-street-cop-finra-halts-173421890.html

I’ve reached out to OFAC asking for clarification on whether Executive Orders 13662 or 14024 apply to ADRs in Sberbank or Gazprom.

I’ll wait for their response before making a more technical post. Long story short, U.S. citizens worldwide are prohibited from trading in “new equity” issued by the companies.

It appears the definition of “new” equity is equity issued after the effective date of the sanctions.

Directive 1 [of EO 13662], as amended on September 29, 2017 in accordance with section 223(b) of the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) (Pub. L. 115-44), prohibits transacting in, providing financing for, or otherwise dealing in debt of specified tenors or equity if that debt or equity was or is issued on or after the relevant sanctions effective date (“new debt” or “new equity”) by, on behalf of, or for the benefit of the persons operating in Russia’s financial sector named under Directive 1, their property, or their interests in property.

(Emphasis added.)

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home.treasury.gov/policy-issues/financial-sanctions/faqs/topic/1576/print

PJSC Sberbank of Russia has not issued equity since 2007.

www.sberbank.com/investor-relations/share-profile

It appears, but I am unable to confirm due to their website being blocked, that Sberbank’s ADR program was in 2011.

Gazprom last issued equity in 1993, which shares were converted in 1998. Gazprom issued ADRs in 2006.

web.archive.org/web/20220205014136/https://www.gazprom.com/investors/stock/

The dates are relevant because it appears neither companies’ ADRs or equity issuances fall within the definition of “new” equity under EO 13662, which came into effect in 2014. EO 14024 does not come into effect until March 26 and again only applies to “new” equity.

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Bonus: personification of Russian equities right now.

reddit.com/link/t5zthj/video/eb6qrtqcq8l81/player

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