Goldman Agrees to Pay $2.9 Billion to Settle 1MDB Case

Goldman "accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials" and will pay $2.9 billion, the Justice Department said.
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The Justice Department said Thursday that banking titan Goldman Sachs  (GS) - Get Report agreed to pay more than $2.9 billion to settle charges related to the 1MDB scandal.

“Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB,” Acting Assistant Attorney General Brian Rabbitt said in a statement.

The agreement, “which requires Goldman Sachs to admit wrongdoing and pay nearly $3 billion in penalties, fines, and disgorgement, holds the bank accountable for this criminal scheme.”

Goldman was in hot water for its role in raising $6.5 billion in three bond sales between 2012 and 2013 for the 1Malaysia Development Berhad, or 1MDB, state fund.

The fund raised the money for investment projects and joint ventures. But Malaysian and U.S. officials say $4.5 billion, including some of the money Goldman helped raise, was stolen from 1MDB. Goldman was accused of helping the Malaysian financier Low Taek Jho steal the money.

In July, Goldman agreed to pay $3.9 billion to settle Malaysia’s criminal probe, Reuters reported. And Low has denied wrongdoing, the news service reported. 

Goldman shares recently traded at $204.51, up 0.8%. They have slumped 13% year to date.

On Tuesday, amid reports that a settlement of more than $2 billion was coming, Morningstar analyst Michael Wong wrote, “A $2 billion charge is equivalent to about $5.60 per share. This charge is manageable given that Goldman Sachs’ market capitalization is around $70 billion and that it reported net income to common shareholders of $3.48 billion, or $9.68 per diluted share, for the third quarter of 2020.”

Any future fines are likely to be smaller, he said, putting the fair value of Goldman shares at $239.