Wall Street's top cop just blacklisted a Washington consulting firm.

Promontory Financial Group, the influential Washington, D.C. consulting firm, was fined $US15 million by New York regulators for sanitizing a report on Standard Chartered’s violation of U.S. sanctions on Iran.
While it was investigating Standard Chartered, the New York State Department of Financial Services relied on reports produced by Promontory.
Those reports included testimony that “lacked credibility” the regulator has found. Standard Chartered was Promontory’s client, the DFS explained, and so the consultant changed language in the report for the bank’s benefit. From the report:

There are numerous instances where Promontory, at the direction of the Bank or its counsel, or at its own initiative, made changes to “soften” and “tone down” the language used in its reports, avoid additional questions from regulators, omit red flag terms or otherwise make the reports more favourable to the Bank.

In addition to the fine, the regulator is also banning Promontory from having access to confidential information.

Accordingly, the Superintendent has determined that the ends of justice and the public advantage would not be served by providing Promontory with access to confidential supervisory information. The Department intends to deny all such requests until further notice.

Promontory was founded by an ex-regulator in 2001 and has since grown to include dozens of people formerly employed by Washington agencies responsible for overseeing Wall Street.

Founder Eugene Ludwig has poached top names from bank boards and from D.C. regulators including the Treasury Department’s Office of the Comptroller of the Currency and the Federal Reserve to advise banks on regulatory matters, among other issues.

It’s not the first time DFS has smacked down a consultant for not disclosing enough information. Deloitte LLP also paid a fine in 2013 after accusations it watered down a separate report on Standard Chartered and PricewaterhouseCoopers paid $US25 million in fines after it reportedly sanitised documents involving Bank of Tokyo-Mitsubishi UFJ.

“The Department will continue to aggressively investigate and address conflicts of interest at consulting firms, which is a critical part of combating misconduct and improving accountability in the financial markets,” said acting superintendent Anthony Albanese.

NOW WATCH: Animated map renames states for countries with similar GDPs

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.