KUALA LUMPUR – Insurers of Goldman Sachs officers and directors will have to fork out US$79.5 million (RM349.64 million) to resolve the shareholder derivative suit which was filed against them for getting the bank involved in the 1Malaysia Development Bhd (1MDB) financial scandal.
A preliminary settlement was filed on Friday in Manhattan, New York, and pending approval by US District Judge Vernon Broderick, reported Reuters.
It will be the second-largest shareholder derivative settlement in federal court.
The settlement to Goldman Sachs will be directed to compliance and governance measures, especially empowering the chief compliance officer, and an internal anonymous tip hotline.
Goldman had sold US$6.5 billion in bonds for 1MDB and made US$600 million in fees.
In 2020, it paid nearly US$3 billion in fines and its Malaysian unit pleaded guilty in a US court.
Some US$4.5 billion in funds had been stolen from 1MDB, according to US and Malaysian authorities, but Malaysia said at least US$4.3 billion more remained unaccounted for.
Reuters also reported that shareholders led by the Atlanta-based Fulton County Employees’ Retirement System are seeking to hold Goldman CEO David Solomon, predecessor Lloyd Blankfein and others accountable for “conscious disregard of their oversight obligations” leading to missing the “red flags” about the 1MDB looting.
Meanwhile, Goldman Sachs investors led by Swedish pension fund Sjunde AP-Fonden are seeking to question three former employees in a class action suit against the bank.
As part of a suit against Goldman and its senior management over the 1MDB scandal, the plaintiffs named former partner Toby Watson and former employees Cyrus Shey and Patrick Kidney – who testified in the trial against Roger Ng.
According to court documents, Watson played “an integral role” in structuring bond deals for 1MDB and was the managing director at the bank’s Hong Kong office at the time, reported Bloomberg.
Aside from Goldman, the suit also names the bank’s former CEO Lloyd Blankfein and former COO Gary Cohn as defendants.
The suit claims that the three have knowledge about Goldman’s involvement with 1MDB and fugitive businessman Low Taek Jho.
It added that the process “will seek to uncover information regarding red flags that arose during the bond approval process and the due diligence practices and procedures”. – The Vibes, May 14, 2022
