Standard Chartered Settles £1.5bn Lawsuit Over Sanctions Liability

Standard Chartered has settled a £1.5-billion investor lawsuit in London that alleged the bank downplayed the scale of its Iran sanctions breaches and misled shareholders about its compliance controls, the Financial Times said.

More than 200 claimants representing around 1,400 investment funds had sued the lender, arguing that they bought or held Standard Chartered shares on the basis of misleading statements and omissions about the bank’s historic sanctions, money laundering, and financial crime compliance issues, particularly in relation to US sanctions on Iran, the newspaper reported.

The settlement was reached after the Court of Appeal ruled that Standard Chartered would be required to disclose sensitive documents as the case moved toward a trial scheduled for next October. The bank had resisted the disclosure, arguing that releasing the material could breach its confidentiality obligations to foreign regulators and expose it to further regulatory or even criminal action overseas.

In a ruling published on Friday, the Court of Appeal noted that “after a draft of this judgment was circulated to the parties, they reached a settlement of the entire action,” according to the FT, which also noted that the financial terms of the deal were not disclosed.

The bank said in a statement that “notwithstanding that Standard Chartered has always denied any and all liability, a settlement has been reached to bring this matter to a close,” the FT reported. The bank added that the deal is “not material to the Group’s operating results or financial position.”

Litigation funder Woodsford, which backed the investor claim, told the news outlet that the case had secured compensation for institutions that argued the bank’s disclosure failures had contributed to losses.

According to the bank’s latest half-year report, the claimants alleged that Standard Chartered made untrue or misleading statements, and failed to disclose material information, about historic sanctions breaches and wider financial crime compliance, and that similar disclosure failures affected rights issue prospectuses in 2008, 2010 and 2015.

Standard Chartered’s sanctions record has been under scrutiny for more than a decade. In 2019, it agreed to pay $1.1 billion to U.S. and UK authorities over violations of Iran sanctions and failures to respond adequately to red flags about customers, a settlement that included a guilty plea by a former employee. That followed a $667-million penalty and a deferred prosecution agreement with U.S. prosecutors seven years earlier over previous Iran-related breaches, the newspaper said.

The lawsuit formed part of a growing wave of shareholder claims in London over alleged misstatements and omissions, a type of securities litigation long established in the United States but only recently gaining traction in the UK, according to the report.