Last week, as reported in Digital Journal
, Standard Chartered bank was accused of hiding 60,000 transactions with Iran, contrary to US sanctions. The bank was characterised by the New York regulator as a "rogue institution", a claim vehemently denied by Standard Chartered's Chief Executive, Peter Sands.
Standard Chartered saw its share value slashed as a direct result of the allegations. It also faced the prospect of losing its licence to operate on Wall Street. In an eleveth hour settlement, prior to today's scheduled hearing, the bank agreed to pay a civil penalty of $340 million. As BBC News
reports, the deal also enables the DFS to install a monitor at the bank to assess its money laundering compliance.
The market has responded positively to the news with shares rising by 3 percent. According to the Independent
, Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, explained the rise by saying:
The quick and decisive action which Standard has shown in settling this initial claim, which itself is lower than anticipated, has resulted in a further spike to the share price in early trade.
Mr Hunter is not the only financial analyst to see the bank's sudden turnabout, from denial to admission, as a strategic attempt to reasure investors. Reuters
cites an unnamed major investor in the bank as saying:
I think Standard Chartered wanted to settle because the share price had become destabilised.
However, according to Financial News
, New York Governor Andrew Cuomo, judged the result to be a demonstration of:
...the effectiveness and leadership of the new Department of Financial Services, and I commend the state legislature for creating a modern regulator for today's financial marketplace.
Whilst the settlement with the New York regulator may have reassured the market, Standard Chartered still faces investigations from other US authorities, including the U.S. Treasury, the Federal Reserve, the Justice Department and New York prosecutors. A spokesman for the bank's lawyers, Sullivan & Cromwell, in a blandly reassuring statement, asserted:
Negotiations are going on between the other agencies, and we are talking to them. It is safe to assume there will now be a collective agreement.
Standard Chartered is only the latest in a list of banks to have negotiated a settlement to avoid prosecution in cases of alleged money laundering. Other notable cases include ING, Barclays, Lloyds, Credit Suisse, ABN AMRO and HSBC.