Zambia SEC sanctions Standard Chartered over China property bond misconduct

Zambia’s Securities and Exchange Commission (SEC) has taken action against Standard Chartered for selling bonds from a Chinese property company to a local client during China’s real estate crisis. According to a source familiar with the matter, the SEC found that Standard Chartered committed two breaches of rules. Firstly, the bank did not disclose important information about the bonds it sold in March 2022. These bonds were issued by the Chinese developer Sino-Ocean and later defaulted, leaving investors with losses. Secondly, the SEC discovered that Standard Chartered used contract clauses that placed the responsibility of risks solely on the client, contrary to Zambia’s securities regulations.

Standard Chartered, currently in the process of selling its wealth and retail banking operations in Zambia, acknowledged the SEC’s decision. In a statement to Reuters, the bank expressed its intention to appeal the enforcement action. Standard Chartered emphasized its commitment to regulatory compliance across all markets where it operates.

The SEC, which initiated the investigation in April, declined to comment on the case when approached by Reuters. Standard Chartered has 30 days to appeal the SEC’s decision under Zambia’s Securities Act. While the SEC has the authority to impose fines or issue public or private reprimands, it cannot compel lenders to compensate customers for mis-selling.

Standard Chartered, operating in Zambia for almost 120 years, announced plans to divest its wealth and retail banking businesses in Zambia, Botswana, and Uganda in November. The bank is streamlining its operations in Africa and has recently sold its businesses in Tanzania, Angola, Cameroon, The Gambia, and Sierra Leone.

(Additional reporting by Chris Mfula in Lusaka. Editing by Elisa Martinuzzi and Mark Potter)