Goldman Sachs officials reach $79.5 million shareholder settlement over 1MDB scandal

NEW YORK, May 13 (Reuters) – Officers and directors of Goldman Sachs Group Inc (GS.N) have reached a $79.5 million settlement to resolve shareholder claims that their poor oversight contributed to the bank is involved in the scandal of the plundering of the Malaysian sovereign wealth fund 1MDB. .

A preliminary settlement of the so-called derivative shareholder lawsuit was filed Friday in Manhattan federal court and requires the approval of U.S. District Judge Vernon Broderick.

Defendants’ insurers would pay the $79.5 million to Goldman, which would apply it to compliance and governance measures, including giving more power to its chief compliance officer and creating an anonymous hotline to employee advice.

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U.S. prosecutors say Goldman helped 1MDB arrange $6.5 billion in bond sales, but $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 accountable for ‘conscious disregard of their oversight obligations’ because the bank missed the “red flags” of fraud.

None of the defendants have admitted wrongdoing or liability by agreeing to settle. Goldman spokeswoman Maeve DuVally declined to comment.

The bank had previously agreed to pay billions of dollars to authorities in the United States and other countries on 1MDB, and in 2020 entered into a three-year deferred prosecution agreement with the United States Department of Justice.

On April 8, former Goldman banker Roger Ng was convicted in Brooklyn, New York, of corruption and money laundering charges for his role in the scandal. Read more

Led by law firm Saxena White, attorneys for the shareholders called the $79.5 million payout an “exceptional payout to the company” and the second-largest shareholder derivative settlement in the Federal Court circuit that includes New York.

The attorneys plan to seek fees of up to 25% of the settlement amount, or approximately $19.9 million, that Goldman would pay.

The case is Fulton County Employees’ Retirement System v Blankfein et al, US District Court, Southern District of New York, No. 19-01562.

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Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot

Our standards: The Thomson Reuters Trust Principles.

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