GOLDMAN Sachs has agreed to settle a shareholder lawsuit alleging that the Wall Street bank misled investors about its involvement in the management of funds linked to 1Malaysia Development Berhad (1MDB), Malaysia’s sovereign wealth fund at the centre of a global corruption scandal.
Reuters reported on Thursday that the agreement was reached between Goldman Sachs and its shareholders, with the parties planning to submit the proposed settlement for preliminary court approval by no later than 20 May, according to a letter filed at the Manhattan Federal Court on Wednesday.
The terms of the settlement have not been disclosed, and Goldman Sachs declined to comment on the development.
Lawyers representing the shareholders, who are led by Sweden’s pension fund Sjunde AP-Fonden, also did not provide any comment.
The lawsuit stems from allegations that Goldman Sachs misrepresented its role in the 1MDB affair and repeatedly promoted what investors claimed was a strong risk management framework, despite its involvement in transactions now central to one of the world’s largest financial scandals.
Former Malaysian prime minister Datuk Seri Najib Razak established 1MDB to drive economic development, with the assistance of fugitive businessman Low Taek Jho, also known as Jho Low.
US and Malaysian authorities have stated that approximately US$4.5 billion was misappropriated from 1MDB, with funds allegedly routed through offshore bank accounts and entities linked to Jho Low.
Goldman Sachs helped 1MDB raise US$6.5 billion through bond issuances and earned an estimated US$600 million in fees from the transactions.
Shareholders have argued that the bank misled investors about its conduct and profited substantially from transactions tied to the alleged fraud, adding that Goldman’s share price fell sharply once the extent of its involvement became clearer to markets.
In 2020, Goldman Sachs agreed to pay US$2.9 billion in penalties and allowed its Malaysian unit to plead guilty as part of a settlement with the United States Department of Justice and other authorities investigating the 1MDB scandal.
A federal judge in Brooklyn formally ended the US criminal case against Goldman Sachs in May 2024 after the bank completed a three-year deferred prosecution agreement.
In earlier proceedings, one Goldman Sachs banker was convicted for assisting in the misappropriation of 1MDB funds, while another pleaded guilty. - April 23, 2026
