FIVE law firms are vying to take control of litigation against Goldman Sachs Group Inc over the 1MDB scandal, asking a judge to appoint their clients as lead plaintiff in a group lawsuit accusing the bank of misleading investors about its work with the Malaysian state fund.
The lawyers who are selected as main counsel in the class action will map strategy, file legal motions, manage settlement talks and divvy up the work among collaborating firms.
They stand to collect the most in fees in the event of a settlement or favourable verdict.
The lawyers said their clients suffered large financial losses and were best positioned to fairly represent the group of investors covered by the case. It will fall to US District Judge Vernon S. Broderick in Manhattan to select the firm or firms that control the lawsuit.
Shareholders sued the investment bank in December, accusing it of making “untrue statements” and omitting “material facts” that deceived them about the firm’s work with 1MDB, for which the bank arranged US$6.5bil's worth of bond sales.
The investors seek unspecified damages. The bank hasn’t yet filed its response to the complaint.
The firms seeking the lead role are Levi & Korsinsky LLP; Kaplan Fox & Kilsheimer LLP; Labaton Sucharow LLP; Kessler Topaz Meltzer & Check LLP; and Pomerantz LLP.
They’re representing plaintiffs including an affiliate of Meitav Dash, an Israeli investment firm with US$32bil under management; the IWA Forest Industry Pension Plan, a retirement fund for Canadian forestry workers; and Swedish pension fund Sjunde AP-Fonden.
The scandal has roiled Malaysian politics and reached the highest levels at Goldman Sachs as investigators from Singapore to Switzerland allege billions of dollars were embezzled and misused over a number of years.
In a US criminal case, the bank’s former South-East Asia chairman, Tim Leissner, pleaded guilty and admitted bribing officials to get bond deals, saying a culture of secrecy at Goldman Sachs led him to hide wrongdoing from compliance staff.
Malaysia has said it will extradite former banker Roger Ng, Leissner’s deputy, to the US to face charges.
The US alleges that a small group of Malaysians diverted money from 1MDB into personal accounts disguised to look like legitimate businesses, and kicked back some of those funds to officials.
Goldman Sachs made US$593mil working on three bond sales that raised US$6.5bil for 1MDB in 2012 and 2013, dwarfing what banks typically make from government deals.
A separate lawsuit is pending against the firm by two Abu Dhabi investment funds that claim they suffered losses.
The case is Plaut vs Goldman Sachs Group Inc, 1:18-cv-12084, US District Court, Southern District of New York (Manhattan). – Bloomberg