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Did StanChart Admit Guilt? Lawsky’s Statement Vague on the Matter

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StanChart Settles: Standard Chartered agreed to pay $340 million to settle Benjamin Lawsky's money-laundering charges, but it's unclear how far the U.K. bank actually budged from its initial position that most of the allegedly illegal transactions were kosher. "The parties have agreed that the conduct at issue involved transactions of at least $250 billion," according to the official statement from Lawsky's New York State Department of Financial Services. This sounds to us like a prosecutor saying “the defendant admits that I have accused him of pouring tar into those 250 mailboxes” — a far cry from brandishing a confession to all 250 acts of vandalism. Remember, Standard Chartered had insisted last week that only $14 million of the transactions were improper. Well, press releases are seldom lucid, so let's go to the actual settlement document to find out whether StanChart really admitted any wrongdoing. … Oh wait, there isn't one. According to the Journal, "The settlement took the form of a term sheet signed by [StanChart's CEO] that spelled out the key points in the agreement, including the monetary penalty, said people familiar with the matter. Because the deal was struck so quickly, the final settlement agreement is yet to be drafted in its full legal format." So just like the national mortgage settlement, the full contents of this deal won't be available for a while. In the meantime the public must rely on whatever information the anonymice choose to leak to the media. Wall Street Journal, Financial Times, New York Times, Washington Post

Parsing the Deal: StanChart's fine "is at the bottom of the range of those so far meted out to European banks for similar offenses," notes the Journal's "Heard on the Street" column. The relative puniness of the settlement "clearly suggests the bank's version of events was closer to reality — that the overwhelming majority of its Iranian transactions were legitimate under U.S. rules but the bank was at fault for hiding the details from regulators to avoid lengthy delays to client business," the column says. The Journal's editorial writers call the deal "Lawsky's Spitzer Moment," and coming from them, that's not a compliment. "His grandstanding on Standard Chartered may also do more harm than good," the editorial says. "Sanctions enforcement requires global cooperation. If the message to bankers … is to withhold information lest they invite overzealous prosecution, reputational damage and destruction of shareholder wealth, we can expect less cooperation from other banks. … It also hurts the reputation of U.S. law enforcement if banks can be subject to multiple prosecutions based on different standards and different claims of evidence." And for all this, StanChart may be subject to further fines, as several other U.S. agencies have ongoing investigations, according to a news article in the FT. Adds the British paper's "Lex" column: "more importantly, it remains to be seen how much [the bank's] previously sterling reputation has been damaged."

Wall Street Journal

Wal-Mart, Target, 7-11, Sunoco and several other big merchants will unveil today a jointly developed mobile payment network that will compete with Google Wallet, Isis, and the lot, the paper reports.

 

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