Zambia’s SEC sanctions Commonplace Chartered over China property bond mis-selling, supply says

By Marc Jones and Chris Mfula

LONDON (Reuters) -Zambia’s Securities and Alternate Fee (SEC) has sanctioned Commonplace Chartered (OTC:SCBFF) for mis-selling a Chinese language property firm’s bonds to one of many financial institution’s native wealth shoppers on the peak of the Asian nation’s real-estate disaster, in accordance with a supply.

The supply acquainted with the matter informed Reuters that the UK-headquartered financial institution, which is at present trying to promote its wealth and retail banking companies in Zambia, was dealing with “enforcement motion” for 2 breaches of SEC guidelines following a months-long investigation.

The primary was that it had did not disclose “materials info” concerning the bonds it bought in March 2022. These bonds, issued by state-backed Chinese language developer Sino-Ocean, defaulted simply over a yr later and at the moment are, like many within the sector, virtually nugatory.

As well as, the SEC discovered Commonplace Chartered had additionally used “exclusionary” contract clauses, which meant the consumer held all accountability for the dangers, which fits towards Zambia’s securities guidelines.

In a press release to Reuters, Commonplace Chartered stated: “We respect the result of the Securities Alternate Fee in Zambia, nonetheless, in accordance with acceptable native procedures we are going to respectfully be exercising our proper to enchantment.”

“We’re absolutely conscious of this matter, and we’re reviewing the required particulars to make clear the state of affairs. It’s our precedence on the Financial institution to make sure compliance with regulatory requirements throughout all of our markets.”

The SEC, which began its investigation of the case in April, stated it was not capable of touch upon the matter when requested by Reuters. Below Zambia’s Securities Act, Commonplace Chartered now has 30 days to lodge its enchantment.

Zambia’s SEC has the facility to tremendous, or publicly or privately “censure or reprimand” lenders, though it could possibly’t formally organize them to compensate prospects for mis-selling.

Reuters wasn’t capable of set up what penalty the regulator is planning to impose on Commonplace Chartered.

The lender introduced in November it was trying to promote its Zambian wealth and retail banking companies alongside these in close by Botswana and Uganda.

It has operated in Zambia for practically 120 years making it the nation’s oldest financial institution.

It’s at present lowering its total footprint in Africa, nonetheless, having additionally bought its Tanzania enterprise and subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone within the final couple of years.