NEW YORK: Goldman Sachs has agreed to pay US$500mil to settle a class action lawsuit accusing the Wall Street bank of defrauding shareholders about its work for 1MDB, a Malaysian sovereign wealth fund that became embroiled in a corruption scandal. The parties said last month they had agreed to settle, but terms were not disclosed at the time. Lawyers for the shareholders, led by Swedish pension fund Sjunde AP-Fonden, disclosed the amount in a Wednesday filing in Manhattan federal court.
"The settlement is an outstanding result for the class," lawyers for the plaintiffs wrote in the filing.
A judge must approve the settlement.
Neither Goldman Sachs' lawyers nor a spokesperson for the bank immediately responded to requests for comment.
Former Malaysian prime minister Datuk Seri Najib Razak set up 1MDB to promote economic development, with help from Malaysian financier Jho Low, who is now a fugitive.
U.S. and Malaysian authorities have said US$4.5bil was siphoned away from 1MDB, with some diverted to offshore bank accounts and shell companies linked to Low.
Goldman helped 1MDB sell US$6.5bil of bonds and collected an estimated US$600mil in fees.
Shareholders accused the bank of lying about its role in the fraud while repeatedly touting its supposedly robust risk management.
They said Goldman's share price tumbled after investors realized Goldman "actively facilitated - and handsomely profited from" the fraud.
Goldman agreed in 2020 to pay US$2.9bil in penalties and have a Malaysian unit admit criminal wrongdoing to settle 1MDB probes by the U.S. Justice Department and other authorities.
A Brooklyn, New York, judge formally ended the U.S. criminal case against Goldman in May 2024, after the bank completed a three-year deferred prosecution agreement.
One Goldman banker was convicted of helping loot 1MDB, and another pleaded guilty. - Reuters
(Reporting by Luc Cohen in New York Editing by Rod Nickel)
