Exclusive: According to a source, Zambia’s SEC has sanctioned Standard Chartered for misselling China real estate bonds

Standard Chartered has been sanctioned by Zambia’s Securities and Exchange Commission (SEC) for deceiving a local wealth customer about the bonds of a Chinese real estate company during the height of the Asian nation’s real estate crisis, according to a source.

The UK-based bank, which is now seeking to sell its wealth and retail banking operations in Zambia, is facing “enforcement action” for two violations of SEC regulations after a months-long inquiry, the person familiar with the situation told Reuters.

The first was that it had offered bonds in March 2022 and had not disclosed “material information” about them. After defaulting a little more than a year later, those bonds—which were issued by Sino-Ocean, a state-backed Chinese developer—are now nearly worthless, much like many others in the industry.

In violation of Zambia’s securities laws, the SEC also discovered that Standard Chartered had employed “exclusionary” contract terms, which meant the client had full responsibility for the risks.

Standard Chartered said in a statement to Reuters: “We respect the outcome of the Securities Exchange Commission in Zambia, but we will respectfully be exercising our right to appeal in accordance with appropriate local procedures.”

“We are looking into the relevant information to provide clarification, and we are completely aware of this issue. At the Bank, ensuring adherence to regulatory standards in each of our markets is our top responsibility.

The S&P 500 erased its 2025 gains as U.S. equities fell on Friday, bolstering predictions that the Federal Reserve will be hesitant in lowering interest rates this year after a positive jobs report fueled new inflation concerns.

When Reuters called the SEC, which began looking into the case in April, for comment, it stated it was unable to comment. The Securities Act of Zambia now gives Standard Chartered 30 days to file an appeal.

The SEC of Zambia can “censure or reprimand” lenders, either publicly or privately, but it cannot formally require them to pay consumers back for misselling.

The regulator’s intended penalty against Standard Chartered was not clear to Reuters.

The lender declared in November that it was seeking to sell its retail banking and wealth management operations in Zambia, as well as those in neighboring Botswana and Uganda.

With almost 120 years of operation, it is the oldest bank in Zambia.

With the sale of its Tanzanian operations and subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone in recent years, it is currently lowering its overall presence in Africa.