October 22, 2020
FED fines the Goldman Sachs Group, Inc. $154 million for failure to maintain appropriate oversight, internal controls, & risk management with respect to 1Malaysia Development Berhad (1MDB)
For release at 12:00 p.m. EDT
The FED on Thursday announced it has fined the Goldman Sachs Group, Inc. $154 million for the firm’s failure to maintain appropriate oversight, internal controls, & risk management with respect to Goldman’s involvement in a far-reaching scheme to defraud a Malaysian state-owned investment & development company, 1Malaysia Development Berhad (1MDB).
In 2012 & 2013, Goldman arranged & underwrote three bond offerings that raised $6.5 billion for 1MDB. Certain former Goldman bankers in Asia participated in a scheme with Malaysian businessman Low Taek Jho & others to divert substantial portions of the proceeds from the 1MDB offerings for their personal benefit & to pay bribes to certain foreign government officials. Goldman’s transaction approval processes & internal controls failed to detect or prevent the scheme or to address obvious red flags around the 1MDB offerings. The Board is requiring Goldman to improve its risk management & oversight of significant & complex transactions, enhance its due diligence related to these transactions, & improve its anti-bribery compliance program.
The Board’s action is being taken in conjunction with actions by other authorities including the U.S. Department of Justice, the Securities & Exchange Commission, the New York Department of Financial Services, the U.K. Financial Conduct Authority, & the Bank of England Prudential Regulation Authority, & other foreign authorities. The penalties & disgorgement announced by all of the agencies total approximately $2.9 billion.
The Board has previously prohibited from banking three former Goldman employees in connection with the 1MDB offerings. In March 2019, the Board prohibited former Goldman employees Tim Leissner & Roger Ng for their roles in the scheme to divert bond proceeds. Leissner was also fined $1.42 million. In January 2020, the Board also prohibited former Goldman employee Andrea Vella for unsafe & unsound practices in connection with the bond offerings.
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October 22, 2020