* Investors fear record fines, risk of countersuing regulator
* Concerns that top execs could lose jobs
* Some shareholders say StanChart not communicating adequately
* StanChart shares still down 15 pct since news broke
LONDON, Aug 9 (Reuters) - Investors are proving slow to rally behind Standard Chartered after allegations the bank broke U.S. sanctions against Iran, spooked by talk of risky countersuits, record fines and fears that top executives could lose their jobs.
Chief Executive Peter Sands' defence of StanChart's cherished image as one of the cleanest names in global finance has so far failed to convince some shareholders, who are taking their time to reappraise their exposure to the latest in a string of British banking scandals.
StanChart lost more than a quarter of its market value in 24 hours after the New York State Department of Financial Services (DFS) accused the bank on Monday of assisting $250 billion of money-laundering transactions with Iran, earning lucrative fees over nearly 10 years.
The volume of illicit transactions has been fiercely contested by StanChart executives, who claim just $14 million worth of deals flouted the strict U.S. rules.
At 1,363 pence, StanChart shares are still trading around 15 percent down on levels before the New York regulator branded it a "rogue institution", reflecting concerns it could struggle to shake the tag off.
"Even if it is only $14 million, they have still committed a crime, and they are still guilty," one top 10 investor told Reuters, explaining why the shares remained depressed.
"And if this is hot air and they are just bluffing, then they are playing a very dangerous game," the investor said, putting the risk of either Sands or Chief Financial Officer Richard Meddings quitting the bank at "5-8 percent and rising".
The bank faces a huge fine, and even its state banking licence is under threat, a punishment that would paralyse its U.S. operations and relegate the London-listed institution to the second tier of global banks.
One top 25 investor said speculation that StanChart could countersue the DFS for injury to its reputation and stock price were adding to worries about the potential loss of U.S. business.
"I think the phrase 'Don't fight the Fed' applies in more ways than just one. Who knows what else the regulator could unearth if they really wanted a fight?" he said.
"(StanChart) tend to have a chippy approach which doesn't always win friends, and they need to be careful ... I would rather see them settle and leave this whole sorry saga behind them."
London lawyers echoed the warning.
"It's very difficult to say whether Standard Chartered believe they have a case without knowing all the details ... but I think history tells us that it is extremely tough to take on the U.S. regulators and win," Tom Hibbert, head of the banking litigation group at City of London law firm RPC.
Analysts at Canaccord Genuity said StanChart's stock was already ripe for a sell-off even before its high-profile tussle with U.S. regulators came to light.
Low exposure to the euro zone's troubles, healthy capital reserves and a halo burnished by steering clear of the interest rate manipulation scandal tainting other banks have given it a trading premium so wide that returns could only be reached through "near flawless execution of ambitious consensus estimates".
"To our mind the stock is priced for everything to go right, and nothing to go wrong," the analysts said, maintaining their advice to sell the stock.
Jeff Yeh, Chief Investment Officer at Capital Investment Trust in Taipei, with about $5 billion in assets, said the bank's woes offered a timely reminder of the risks investors face by supporting lenders with deep roots in emerging markets.
"I think the events of the past few days really drove home that point, and I think a growing number of funds may not be as comfortable with these large banks as they used to be."
While quick to deny the DFS allegations in the press, some say StanChart's lack of direct communication with shareholders is limiting its share price recovery.
"They haven't been in touch with us, which surprises me, because when they had rights issue one, two and three, they were in touch well in advance, but this time, not a tweet," the top 10 investor said.
"We have been proactive in reaching out to all our investors, both shareholders and debtholders, and the process is ongoing," a spokesman for Standard Chartered said.
It will not want to lose the goodwill of those such as Hugh Young, managing director of top-five StanChart shareholder Aberdeen Asset Management Asia, who is giving it the benefit of the doubt for now.
"It's something to worry about, although I noticed a lot of emotive and sensational language which slightly diminishes the allegation ... The StanChart we recognise is not the rogue bank portrayed in the allegation," he said.