Goldman Sachs faces record $350 million fine from Hong Kong over 1MDB scandal
Hong Kong's financial regulator slapped Goldman Sachswith a $350 million fine on Thursday for its involvement in the 1MDBscandal.
- The bank's "serious lapses" and deficiencies in management contributed to the misappropriation of $2.6 billion from the 1Malaysia Development Berhad fund, the Securities and Futures Commission said in a statement.
- The fine is the largest ever imposed by the SFC, and marks the latest in a string of hefty settlement charges for the bank.
- Goldman agreed to pay Malaysia $3.9 billion in July to settle investigations, and is expected to settle with the US Justice Department soon for more than $2 billion.
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Goldman's "serious lapses and deficiencies in its management supervisory, risk, compliance, and anti-money laundering controls" contributed to the misappropriation of $2.6 billion from the 1Malaysia Development Berhad fund, the Securities and Futures Commission said in a statement. The bank also allowed 1MDB's bond offerings in 2012 and 2013 to take place despite "numerous red flags" surrounding the deals, it said.
The $350 million fine is the largest ever imposed by the regulator, but follows much larger fines elsewhere. Goldman agreed to pay Malaysia $3.9 billion in July to settle the country's criminal probe. The settlement was spread across a $2.5 billion cash fine and the guaranteed recovery of $1.4 billion in asset proceeds.
The bank is also set to reach a settlement with the US Justice Department that's expected to cost more than $2 billion, according to a Monday Bloomberg report.
The various probes relate to Goldman Sachs' role in helping the Malaysian fund raise $6.5 billion through three bond offerings. US authorities claim much of the cash raised was stolen by Malaysian government officials and two Goldman bankers. Goldman netted roughly $600 million in fees through the offerings.
Increased legal provisions tied to the bank's settlement with Malaysia slashed its second-quarter profit to $373 million from $2.4 billion. The earnings update suggests future reports could see downward pressure from more recent and upcoming fines.
Still, the recent settlements bring Goldman closer to wrapping up a period of significant uncertainty for its own business and its shareholders.
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