Goldman Sachs Reaches Major Shareholder Settlement
Goldman Sachs has agreed to pay $500 million to resolve a class-action lawsuit filed by shareholders over the bank’s involvement with Malaysia’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB). The settlement, which still requires approval from a federal judge, is one of the largest shareholder-related payouts linked to the scandal.
Investors alleged that the Wall Street giant misled shareholders about its role in transactions involving 1MDB while presenting its compliance and risk-management systems as effective. The lawsuit argued that investors suffered losses when details of the scandal emerged and negatively affected the company’s stock performance.
Background of the 1MDB Controversy
The 1MDB fund was established to support Malaysia’s economic development but later became the center of a global corruption investigation. Authorities in the United States and Malaysia have stated that approximately $4.5 billion was improperly diverted from the fund through a network of shell companies and offshore accounts linked to financier Jho Low, who remains a fugitive.
Goldman Sachs played a key role in helping 1MDB raise around $6.5 billion through bond offerings, earning an estimated $600 million in fees. Shareholders claimed the bank failed to fully disclose risks connected to those transactions and profited significantly from the deals.
Previous Penalties and Legal Actions
The latest settlement follows several earlier actions related to the scandal. In 2020, Goldman Sachs agreed to pay approximately $2.9 billion in penalties and a Malaysian subsidiary admitted wrongdoing as part of resolutions with regulators and prosecutors.
The bank’s U.S. criminal case was formally concluded in 2024 after it fulfilled the terms of a deferred prosecution agreement. Meanwhile, former Goldman bankers faced criminal proceedings, with one being convicted and another pleading guilty in connection with the scheme.
Court Approval Still Required
Although both parties have agreed to the $500 million figure, the settlement must receive judicial approval before becoming final. If approved, it would bring an end to a significant shareholder dispute that has shadowed Goldman Sachs for years and represents another step toward closing legal matters stemming from the 1MDB affair.
