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Goldman Sachs (GS) Concludes 1MDB Legal Case With Malaysia
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Recently, Goldman Sachs (GS - Free Report) finalized a settlement worth $3.9 billion by signing an agreement with Malaysia resolving the multibillion-dollar 1Malaysia Development Berhad (1MDB) scandal, per Bloomberg. The agreement, in principle, announced last month was confirmed in a regulatory filing in New York.
The settlement agreement includes a payment of $2.5 billion as penalties to the Government of Malaysia within 10 days. Notably, this July, Goldman guaranteed the Malaysian government to receive $1.4 billion from the proceeds of assets, which have been seized globally as those were related to the 1MDB scandal. Markedly, the guarantee on these assets does not expose Goldman to any significant risks.
Nevertheless, other pending governmental and regulatory investigations, including the U.S. government, continued on Goldman related to the 1MDB scandal.
Background
Goldman has been scrutinized for playing a role in raising funds through bond offerings for 1MDB, the fund entangled in corruption and money-laundering probes in roughly six countries. Per the DoJ, misappropriation of funds, worth $4.5 billion, from 1MDB by the top officials of the fund and their colleagues from 2009 through 2014, included funds raised through Goldman as well.
Therefore, regulators of around 14 countries, including the United States, Malaysia, Singapore and others, have probed Goldman for its role as an underwriter and its doings during the transactions.
Further, in November 2018, criminal charges were levied against two former bankers — Tim Leissner and Roger Ng of Goldman by U.S. prosecutors, as well as on Low — a Malaysian financier, who effectively had the control of the state-owned investment 1MDB. Low has been accused for routing the money out of 1MBD, and paying bribes and purchasing real estate, art, and jewelry. Nevertheless, the bond proceeds were meant for the state’s strategic investments.
Per DoJ, roughly $600 million was earned by the bank, including three bond offerings in 2012 and 2013, which raised $6.5 billion. In addition, huge bonuses were earned by Leissner, Ng and others. Nevertheless, Goldman claimed Leissner and Ng were working to hide criminal activities from management.
In 2018, Leissner accepted the act of conspiracy for laundering money and plotting the violation of the Foreign Corrupt Practices Act. He made profits from the scheme and had contracted to pay up to $43.7 million. Nonetheless, the other employee has not come up with a plea yet and is facing a case in Brooklyn’s federal court.
Remarkably, criminal charges against Goldman and 17 executives had been filed by prosecutors in Malaysia, who were demanding a multibillion-dollar penalty seeking fines of more than $2.7 billion. This was believed to be allegedly misappropriated from the proceeds, and the return of $600 million of fees taken by Goldman.
Malaysian politics was adversely impacted by the scandal, and lifetime bans were imposed on Goldman bankers, including Andrea Vella and Tim Leissner, by the financial industry.
Notably, the case, which involved the bank’s three units, had been on hold due to restrictions imposed by Malaysia since March to contain the coronavirus pandemic. This February, the case got transferred to the High Court, and advanced with the proceedings of the criminal charges first announced in December 2018.
Bottom Line
Although Goldman has resolved quite a few litigation issues, it still faces probes and queries from a number of federal agencies, and a few foreign governments for the bank’s businesses conducted during the pre-crisis period. As a result, the company’s legal expenses are expected to remain elevated, which might partially impede its bottom-line growth in the near term.
Goldman currently carries a Zacks Rank #3 (Hold). Shares of the company have lost 13.5% in the past six months compared with the 14.1% decline registered by the industry.
Stocks to Consider
TD Ameritrade Holding Corporation (AMTD - Free Report) has been witnessing upward estimate revisions for the past 30 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has rallied more than 8% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
E*TRADE Financial Corporation has been witnessing upward estimate revisions for the past 30 days. Further, the company’s shares have gained 25.6% in the past three months. At present, it carries a Zacks Rank of 2.
Artisan Partners Asset Management Inc. (APAM - Free Report) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped 40.1% in three months’ time. It currently sports a Zacks Rank #1.
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Goldman Sachs (GS) Concludes 1MDB Legal Case With Malaysia
Recently, Goldman Sachs (GS - Free Report) finalized a settlement worth $3.9 billion by signing an agreement with Malaysia resolving the multibillion-dollar 1Malaysia Development Berhad (1MDB) scandal, per Bloomberg. The agreement, in principle, announced last month was confirmed in a regulatory filing in New York.
The settlement agreement includes a payment of $2.5 billion as penalties to the Government of Malaysia within 10 days. Notably, this July, Goldman guaranteed the Malaysian government to receive $1.4 billion from the proceeds of assets, which have been seized globally as those were related to the 1MDB scandal. Markedly, the guarantee on these assets does not expose Goldman to any significant risks.
Nevertheless, other pending governmental and regulatory investigations, including the U.S. government, continued on Goldman related to the 1MDB scandal.
Background
Goldman has been scrutinized for playing a role in raising funds through bond offerings for 1MDB, the fund entangled in corruption and money-laundering probes in roughly six countries. Per the DoJ, misappropriation of funds, worth $4.5 billion, from 1MDB by the top officials of the fund and their colleagues from 2009 through 2014, included funds raised through Goldman as well.
Therefore, regulators of around 14 countries, including the United States, Malaysia, Singapore and others, have probed Goldman for its role as an underwriter and its doings during the transactions.
Further, in November 2018, criminal charges were levied against two former bankers — Tim Leissner and Roger Ng of Goldman by U.S. prosecutors, as well as on Low — a Malaysian financier, who effectively had the control of the state-owned investment 1MDB. Low has been accused for routing the money out of 1MBD, and paying bribes and purchasing real estate, art, and jewelry. Nevertheless, the bond proceeds were meant for the state’s strategic investments.
Per DoJ, roughly $600 million was earned by the bank, including three bond offerings in 2012 and 2013, which raised $6.5 billion. In addition, huge bonuses were earned by Leissner, Ng and others. Nevertheless, Goldman claimed Leissner and Ng were working to hide criminal activities from management.
In 2018, Leissner accepted the act of conspiracy for laundering money and plotting the violation of the Foreign Corrupt Practices Act. He made profits from the scheme and had contracted to pay up to $43.7 million. Nonetheless, the other employee has not come up with a plea yet and is facing a case in Brooklyn’s federal court.
Remarkably, criminal charges against Goldman and 17 executives had been filed by prosecutors in Malaysia, who were demanding a multibillion-dollar penalty seeking fines of more than $2.7 billion. This was believed to be allegedly misappropriated from the proceeds, and the return of $600 million of fees taken by Goldman.
Malaysian politics was adversely impacted by the scandal, and lifetime bans were imposed on Goldman bankers, including Andrea Vella and Tim Leissner, by the financial industry.
Notably, the case, which involved the bank’s three units, had been on hold due to restrictions imposed by Malaysia since March to contain the coronavirus pandemic. This February, the case got transferred to the High Court, and advanced with the proceedings of the criminal charges first announced in December 2018.
Bottom Line
Although Goldman has resolved quite a few litigation issues, it still faces probes and queries from a number of federal agencies, and a few foreign governments for the bank’s businesses conducted during the pre-crisis period. As a result, the company’s legal expenses are expected to remain elevated, which might partially impede its bottom-line growth in the near term.
Goldman currently carries a Zacks Rank #3 (Hold). Shares of the company have lost 13.5% in the past six months compared with the 14.1% decline registered by the industry.
Stocks to Consider
TD Ameritrade Holding Corporation (AMTD - Free Report) has been witnessing upward estimate revisions for the past 30 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has rallied more than 8% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
E*TRADE Financial Corporation has been witnessing upward estimate revisions for the past 30 days. Further, the company’s shares have gained 25.6% in the past three months. At present, it carries a Zacks Rank of 2.
Artisan Partners Asset Management Inc. (APAM - Free Report) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped 40.1% in three months’ time. It currently sports a Zacks Rank #1.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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