StanChart Could Countersue US Regulator
Standard Chartered has sought advice about whether it can pursue a legal action against the U.S. regulator that on Monday accused the British bank of being a rogue institution which had funded $250 billion of Iranian sanctions breaches.
The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.
In an interview with the Financial Times, his first since the dispute with the New York state’s Department of Financial Services blew up on Monday, Peter Sands, chief executive, refused to comment on the suggestion of legal redress. But he made no secret of his irritation at the damage done to StanChart. “Our reputation has been damaged,” Mr Sands said. “It’s not worth pretending that isn’t the case.”
StanChart’s shares are 18 percent below their level before the DFS published its report. (Click here for the latest quotes on Standard Chartered)
The development came as it emerged that the DFS’s go-it-alone approach to the StanChart case had caused upset within the regulatory community. Aside from the DFS, headed by Benjamin Lawsky, the Department of Justice, Federal Bureau of Investigation, Federal Reserve, Treasury Department and Manhattan district attorney’s office have all been pursuing sanctions investigations against StanChart for up to two years.
Sir Mervyn King, governor of the Bank of England, said: “I think all that the UK authorities would ask is that various regulatory bodies that are investigating a particular case try to work together and refrain from making too many public statements until the investigation is completed.”
Earlier, another senior regulator had criticised Mr Lawsky’s approach. “He caught everyone offguard. [Standard Chartered] was furious, but so were the Fed and the FSA.”
There was particular friction at the Fed and the Treasury, another person familiar with the matter said, which along with the DoJ and Manhattan district attorney’s office are investigating StanChart’s dealings with Iran.
Several months ago, StanChart offered to pay $5 million to settle on the $14 million of U-turn transactions it agreed were invalid, but the offer was rebuffed by DFS, said people familiar with the matter. StanChart and DFS are in negotiations to resolve the allegations with the regulator eyeing a settlement that could exceed $500 million, one person familiar with the DFS stance said.
In June, ING agreed to pay $619 million to settle violations involving Iran to the U.S. government and this person said it would not be absurd for StanChart’s settlement to be in that range.
