Lawyer lambasts Standard Chartered over settlement
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Your support makes all the difference.Standard Chartered was attacked by one of the top lawyers in the City last night for agreeing a quick settlement of the money-laundering allegations that threatened to destroy the bank and warned that it could be forced to pay out billions more before it can properly settle the scandal.
The bank, headquartered in London but with a strong bias towards business in Asia, agreed to pay $340m (£217m) to New York's department of financial services, a little-known regulator that has grabbed the limelight ahead of wider investigations by the Securities and Exchange Commission and the US department of justice, among other agencies.
Peter Sands, the Standard Chartered chief executive, told staff in a memo yesterday morning that the bank had reached the deal "in the best interests of our shareholders, clients, customers and staff".
City observers with experience of Wall Street say the deal may ramp up the appetite of the other watchdogs for greater amounts of blood, with the more senior regulators unlikely to settle for less than Standard Chartered paid to the DFS over allegations that it violated US laws in $250bn-worth of trades with Iran.
Although the bank's shares jumped on investor relief that the issue may be resolved quickly, experienced City lawyers warn otherwise. Simon Morris, a partner with top City law firm CMS Cameron McKenna, said: "This is not a good settlement for Standard Chartered on any measurement.
"Last week there was a flat denial of wrongdoing, so this would make $340m an immense penalty for the 0.1 per cent of transactions that supposedly slipped through the net. But if you assume some underlying truth in the allegations, then it is a middling settlement; still a hefty price to pay for a continuing licence to run a branch in New York."
Standard Chartered shares rose 56.5p to 1,426.5p but they are still well below the 1,601p they stood at shortly before Benjamin Lawsky of the DFS published his damaging allegations two weeks ago. Mr Morris says the settlement opens the door to more pain. He added: "Nor is this the end of the story."
Standard Chartered is likely to face further fines on top of the DFS one – from the New York Federal Reserve, US Department of Justice and the Office of Foreign Assets Control.
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