Struggling recovery of Standard Chartered shares following a $3 billion sell-off initiated by a US lawmaker
Standard Chartered's Stock Nudges Up Despite Ongoing Allegations
Standard Chartered's stock price inched up by one percent on Monday, reaching 1,319.50, despite ongoing allegations of processing and hiding billions of dollars in transactions for Iran and terrorist organisations.
The bank has been embroiled in a long-running civil case, with claims that it skirted U.S. sanctions and facilitated transactions for terrorist-linked organisations. These allegations, primarily surrounding a $9.6 billion payment to known terrorists and entities linked to Iran, Hezbollah, and Hamas, have been prominently raised by U.S. Rep. Elise Stefanik and whistleblowers.
However, the bank has categorically denied these allegations, calling them "totally false", and notes that they have been repeatedly dismissed by U.S. courts. Standard Chartered is actively cooperating with regulatory authorities and plans to continue defending itself vigorously, asserting the claims are motivated by personal financial gain and aim to damage its reputation.
Jefferies, a financial services firm, has reiterated their target price for Standard Chartered's stock at 1640p. Joseph Dickerson, an equity analyst at Jefferies, stated that the circumstances surrounding the Brutus Trading case are not new and the absence of new facts means the risk of US litigation remains limited for Standard Chartered.
The Brutus Trading case, which has been around since 2012, is not related to the 1MBD scandal. However, Standard Chartered found itself in legal hotwater earlier this year due to a $2.7bn lawsuit over its alleged role in the 1MBD scandal. This case, which is set to expire on August 19, has not led to any changes in the bank's stock price target.
Regarding the regulatory and political actions, calls for investigations into the bank's activities are ongoing, with criticism of New York Attorney General Letitia James for allegedly not acting on whistleblower information. However, a significant related case—Wildman v. Deutsche Bank et al.—which included Standard Chartered among others, was dismissed by a unanimous panel of the Second Circuit Court in July. This ruling upheld the dismissal of claims brought under the Justice Against Sponsors of Terrorism Act (JASTA) by U.S. servicemembers and civilians alleging banks aided terrorism. The court’s decision sets a precedent that limits plaintiffs’ ability to apply JASTA aiding-and-abetting claims against banks.
In summary, while public and political pressure persists, the judicial system has so far dismissed major legal claims against Standard Chartered on these terrorism financing allegations. The bank's stock remains below its previous level of 1,407 after a sell-off on Friday, which was triggered by a letter shared by New York Republican Elise Stefanik, calling for the attorney general to probe the bank over alleged terrorist payments.
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