UK bank weighs lawsuit against US regulator
LONDON — Standard Chartered has sought advice about whether it can pursue legal action against the US regulator that accused it on Monday of being a rogue institution that funded $250bn of Iranian sanctions breaches.
The UK bank’s legal advisers believe "there is a case" for claiming reputational damage, according to two people close to the situation, though the bank is conscious of the delicacy of being aggressive towards its regulators.
In an interview with the Financial Times, his first since the dispute with the New York financial services department blew up on Monday, CEO Peter Sands refused to comment on the suggestion of legal redress. But he made no secret of his irritation at the damage done to Standard Chartered. "Our reputation has been damaged," Mr Sands said. "It’s not worth pretending that isn’t the case."
Its shares remain 18% below their level before the department published its report.
The development came as it emerged that the department’s go-it-alone approach to the Standard Chartered case had caused upset within the regulatory community. Aside from the financial services department, headed by Benjamin Lawsky, the justice department, Federal Bureau of Investigation, Federal Reserve, Treasury and Manhattan district attorney’s office have all been pursuing sanctions investigations against Standard Chartered for up to two years.
Bank of England governor Mervyn King said: "I think all 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 off guard. (Standard Chartered) was furious, but so were the Fed and the FSA (Financial Services Authority)."
There was particular friction at the Fed and the Treasury, according to another person familiar with the matter, which along with the justice department and the Manhattan district attorney’s office are investigating Standard Chartered’s dealings with Iran.
Several months ago, the bank offered to pay $5m to settle the $14m of "U-turn" transactions it agreed were invalid, but the offer was rebuffed by the financial services department, according to people familiar with the matter. Standard Chartered and the department are in negotiations to resolve the allegations and the size of the settlement could exceed $500m, one person familiar with the regulator’s stance said.
In June, ING agreed to pay $619m to settle violations involving Iran.
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