Goldman Sachs agreed to pay $500 million to settle a class-action lawsuit from shareholders who alleged the bank misled them about its 1MDB exposure, according to a court filing disclosed Wednesday.
Lead plaintiff Sjunde AP-Fonden, a Swedish pension fund, called it “an outstanding result for the class.” The suit, originally filed in 2018, alleged Goldman downplayed its role in a scheme that funneled roughly $4.5 billion out of Malaysia’s sovereign wealth fund between 2009 and 2014.
Goldman’s fingerprints were all over the original deal. The bank helped raise $6.5 billion for 1MDB and collected around $600 million in fees from bond sales in 2012 and 2013, a payday now thoroughly swamped by what followed.
Add it up: Goldman already paid the Malaysian government $3.9 billion in 2020 and admitted criminal wrongdoing as part of a $2.9 billion settlement with the Justice Department and regulators in the U.K., Singapore and Hong Kong. The bank also clawed back $174 million from current and former executives. Wednesday’s $500 million brings the total 1MDB tab to roughly $7.5 billion, and it’s more than 12x what the bank originally collected in fees.
The bank collected $600 million to underwrite a fund that turned out to be a kleptocracy’s piggy bank. Every fee dollar cost twelve. That’s one of the most expensive compliance failures in Wall Street history.
Two former Goldman executives, Tim Leissner and Roger Ng, remain in prison. A related Federal Reserve consent order was resolved last year. A judge still has to approve Wednesday’s deal.
— Marcus Webb