By Jane Chanda
Managing Director of Development Finance Company of Uganda (DFCU) Charles Mudiwa, has applauded Zambia’s Securities and Exchange Commission (SEC) for taking a strong stance against Standard Chartered.
The SEC found the bank guilty of mis-selling bonds issued by a Chinese property developer Sino-Ocean to a local wealth client in March 2022.
According to www.Reuters.com, Mudiwa noted that the issue led to an investigation by the SEC, which began in April 2022, uncovered two breaches of SEC rules by Standard Chartered and ultimately resulted in the bank looking to sell its Zambian wealth and retail banking businesses, along with those in Botswana and Uganda.
The move, Mudiwa said, was a clear indication that regulators were committed to protecting investors and maintaining confidence in Zambia’s financial markets.
“The bank’s failure to disclose material information about the bonds, which defaulted just over a year later and are now almost worthless, raises concerns,” he stated.
Mudiwa emphasised that this incident, which occurred at the height of China’s real-estate crisis with far-reaching consequences for investors, showed the importance of Standard Chartered’s commitment to compliance with regulatory standards in maintaining investor trust.
He pointed out that on this matter, the bank had 30 days to appeal the SEC’s decision, noting that while the SEC could fine, censure or reprimand lenders, it could not formally order them to compensate customers for mis-selling.
“Standard Chartered’s use of exclusionary contract clauses, which placed all responsibility for risks on the client, was a clear violation of Zambia’s securities rules and this raises questions about the bank’s prioritization of its clients’ interests,” stated Mudiwa.
In response, Standard Chartered acknowledged the SEC’s decision, stating that it would appeal the outcome while prioritising compliance with regulatory standards across all its markets.
“We respect the outcome of the Securities Exchange Commission in Zambia, however, in accordance with appropriate local procedures, we will respectfully be exercising our right to appeal,” the bank stated.
Standard Chartered has operated in Zambia for nearly 120 years, making it the country’s oldest bank and despite its long history, the bank is currently reducing its footprint in Africa, having sold its Tanzania business and subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone in recent years.
