Promontory Financial Group LLC, a global financial services sector consulting firm, is going to court to appeal regulatory action the New York State Department of Financial Services (NYDFS) imposed on the firm amid concerns about its objectivity.

The NYDFS issued a report indicating that an investigation into Promontory found that the firm “exhibited a lack of independent judgment in the preparation and submission of certain reports” to the NYDFS in 2010-11 and that testimony from its employees during its investigation “lacked credibility.” As a result, the NYDFS has decided to prohibit Promontory from receiving confidential supervisory information under New York banking law.

The investigation related to the consulting firm’s review of transactions that Standard Chartered Bank carried out, which may have violated economic sanctions against Iran. In 2012, the bank settled allegations from the NYDFS in connection with those transactions, paying a US$340-million penalty, among other measures.

According to the regulator, Promontory may have compromised its independence in preparing reports for Standard Chartered that Bank were submitted to the NYDFS. For example, the department’s report says that its investigation found that one senior analyst at the consulting firm wrote, “[t]he most important thing is that we get to the end of the project without jeopardizing our relationship with [Standard Chartered Bank] as a whole.”

The NYDFS report says Promontory toned down the language in its reports to make them more favourable to the bank and that certain information was missing or omitted from these reports. Ultimately, it concluded, “that the ends of justice and the public advantage would not be served by providing Promontory with access to confidential supervisory information.”

In turn, Promontory says in a statement that it will appeal this decision in court and that it will seek a stay of the NYDFS action in New York State Supreme Court.

“We will litigate the matter and defend our firm against this regulatory overreach. We stand behind the integrity of our professionals and the quality of our work, the accuracy of which the order does not dispute,” the statement says.

“We believe the department has willfully misconstrued our work based on a handful of emails taken out of context. Promontory reviewed approximately 131,000 Standard Chartered transactions from 2001 to 2007 totaling more than $590 billion. The two-year-long NYDFS investigation identified no substantive errors,” Promontory’s statement adds.

“Working with outside counsel, we have thoroughly reviewed how we conducted this engagement, examining thousands of emails and other documents. We are convinced that an impartial review of the facts will show that our professionals acted at all times with appropriate independence and an unwavering commitment to factual accuracy,” it concludes.