Goldman Sachs Settles Class-Action Lawsuit for $500 Million
Goldman Sachs has agreed to pay $500 million to settle a class-action lawsuit that accused the bank of misleading shareholders about its involvement with the Malaysian sovereign wealth fund 1MDB. The settlement was disclosed by plaintiffs’ attorneys in a court filing on Wednesday, following an agreement reached between the parties.
Background of the Lawsuit
Between 2009 and 2014, around $4.5 billion was embezzled from the 1MDB fund to finance extravagant lifestyles of the individuals behind the scheme. Shareholders alleged that Goldman Sachs downplayed its role in the scandal, which adversely affected the bank’s share price.
Goldman Sachs had assisted the Malaysian government in raising $6.5 billion for the 1MDB fund, earning approximately $600 million in fees from bond sales in 2012 and 2013, as detailed in the lawsuit filed in 2018.
Previous Settlements and Legal Actions
Goldman Sachs has faced significant legal repercussions for its connection to the 1MDB scandal. In 2020, the bank paid $3.9 billion to the Malaysian government and admitted to criminal wrongdoing. Additionally, Goldman settled with the U.S. Department of Justice and regulators in the U.K., Singapore, and Hong Kong, paying a $2.9 billion penalty. The bank also recovered $174 million from current and former executives implicated in the case.
A related Federal Reserve consent order against Goldman was resolved last year. Two former executives, Tim Leissner and Roger Ng, were sentenced to prison for their roles in the 1MDB scheme.
Implications of the Settlement
The $500 million settlement represents a significant outcome for the class of shareholders involved in the lawsuit. Attorneys for Sjunde AP-Fonden, a Swedish pension fund, described the settlement as “an outstanding result for the class” in the court filing.
While a judge must still approve the settlement, it marks another step in resolving the legal fallout from Goldman Sachs’ involvement with 1MDB.
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