Goldman Sachs officials reached a settlement of $ 79.5 million with 1MDB shareholders

Goldman Sachs officials reached a settlement of $ 79.5 million with 1MDB shareholders

Officers and directors of Goldman Sachs Group Inc have agreed to pay $79.5 million to settle shareholder claims that their inadequate management led to the bank’s involvement in Malaysia’s 1MDB sovereign wealth fund looting crisis. A preliminary settlement of the so-called shareholder derivative lawsuit was filed in federal court in Manhattan on Friday, and U.S. District Judge Vernon Broderick must approve it. The $79.5 million would be paid to Goldman by the defendants’ insurers, who would use it toward compliance and governance measures like giving the chief compliance officer more power and instituting an anonymous hotline for employee tips.

None of the defendants admitted wrongdoing or liability in agreeing to settle. Goldman spokeswoman Maeve DuVally declined to comment. The bank previously agreed to pay billions of dollars to authorities in the United States and other countries over 1MDB, and in 2020 entered a three-year deferred prosecution agreement with the U.S. Department of Justice.

U.S. prosecutors have said Goldman helped 1MDB arrange $6.5 billion of bond sales, but that $4.5 billion was diverted via bribes and kickbacks to government officials, bankers and others. Shareholders led by the Atlanta-based Fulton County Employees’ Retirement System sought to hold Goldman Chief Executive David Solomon, his predecessor Lloyd Blankfein and others responsible for “conscious disregard of their oversight obligations” as the bank missed “red flags” of the fraud.

On April 8, former Goldman banker Roger Ng was convicted in Brooklyn, New York on bribery and money laundering charges over his role in the scandal. Led by the firm Saxena White, the shareholders’ lawyers called the $79.5 million payout “an outstanding recovery for the company,” and the second-largest shareholder derivative settlement in the federal court circuit that includes New York.

The lawyers plan to seek fees of up to 25% of the settlement amount, or about $19.9 million, which Goldman would pay. The case is Fulton County Employees’ Retirement System v Blankfein et al, U.S. District Court, Southern District of New York, No. 19-01562.

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