Goldman Sachs’ 1MDB settlement: Your questions answered
Eight years after Goldman Sachs first arranged a bond for 1MDB, it has finally concluded its settlements worldwide. Overall, it is more than $5 billion poorer for the experience, with an unquantifiable hit to its reputation. Here are the details.
What was settled this week?
Goldman Sachs agreed a settlement worth a combined $2.9 billion with four regulators in four jurisdictions worldwide. Numerous regulators are involved: the US Department of Justice (DoJ), US Securities and Exchange Commission, US Federal Reserve, New York’s Department of Financial Services, the UK's Financial Conduct Authority and Prudential Regulation Authority, the Hong Kong Securities and Futures Commission (SFC) and various regulatory arms of Singapore.
The settlement follows a $3.9 billion agreement with Malaysia in July, which involves $2.5 billion of payments to the Malaysian government, and a commitment to recover and return $1.4 billion of assets.
How important are these numbers?
It depends how you look at it. Numerous unwelcome records were set. The $350 million fine levied by the HK SFC was the largest ever. So was the $122 million in Singapore.
Brian Rabbitt, the DoJ’s acting assistant attorney general, said the settlement includes the largest monetary penalty ever paid to the US government in a corporate criminal foreign bribery case.
Looked at another way, if Goldman ends up paying or forfeiting $5.4 billion, that is equivalent to 63.8% of 2019’s net earnings of $8.47 billion, or around eight months of profit.
The share price barely flickered on the news.