1MDB -- 1 Malaysia Development Berhad -- is a Malaysian sovereign wealth fund that two senior bankers at Goldman Sachs have pleaded guilty to laundering money from. Goldman Sachs is now being investigated by the Department of Justice over its ties to the scandal. The Federal Reserve on Thursday intensified its investigation into how Goldman Sachs eluded the central bank's internal controls while helping 1MDB raise money that soon vanished.
Bank of America said there was too much uncertainty around the scandal, and that upside to the stock could be limited for the near term. The bank believes it's likely that Goldman Sachs will be issued a fine, but that nothing was close to certain and that the timing of the investigation was uncertain. Bank of America lowered its price target on Goldman Sachs to $225 from $280, still implying 16% upside.
Goldman Sachs shares, much like the rest of the banking sector, have reeled this year, down 23.52% year to date. The stock fell 2.58% to $189.75 in morning trading on Friday.