Shares of Standard Chartered Bank (SCBFF) fell $2.20 to $22.40 in New York on Monday after the state's top banking regulator threatened to strip the London company of its license to do business there, alleging that a unit illegally handled at least $250 billion in transactions with Iranian entities.

In London, the shares fell 6% to 14.70 pounds and were the biggest loser among stocks in the FTSE-100 Index. In early Tuesday trading, the shares were down an additional 2.02 pounds, or 13.8%, to 14.4 pounds. 

A scathing report said that from 2001 to 2010 the unit "operated as a rogue institution," earning hundreds of millions of dollars in fees by moving money through its New York branch for Iranian financial institutions under U.S. sanctions.

Post continues below.The New York State Department of Financial Services made the allegations in an order released Monday. They are based on a nine-month probe that included the review of more than 30,000 pages of internal memos, emails and other records, according to the order.

The order requires the bank to explain the apparent violations of law in a hearing later this month and justify why its license to operate in New York shouldn't be revoked, The New York Times said.

The FBI and the Justice Department are conducting a criminal probe, The Wall Street Journal said (registration may be required). It's not known when that probe will be completed.

Standard Chartered said in an emailed statement to news outlets that it was surprised by the New York regulator's order and that it "strongly rejects the position or the portrayal of facts as set out in the order." The bank said that it plans to contest the agency's position and that it is reviewing its compliance and communicating with numerous regulatory and law-enforcement agencies about its discoveries.

The attack on Standard Chartered, which is accused by the US of "willful and egregious violations of law," could be a severe blow to the reputation of the bank. Until Monday, it had been regarded as the most solid of any of the London-listed banks.

It is the latest blow to the reputation of the financial district of London. The city's financial institutions already have been criticized in Washington, D.C., since the HSBC (HBC) money-laundering debacle and JP Morgan Chase's (JPM) multimillion-dollar trading losses at its London office, the Guardian newspaper noted.

"It seems to be that every big trading disaster happens in London," New York Rep. Carolyn Maloney told a congressional panel investigating the JP Morgan fiasco in June.