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GOLDMAN Sachs has agreed to pay US$500 million to resolve a class action lawsuit accusing the bank of deceiving shareholders over its role in the multi-billion-dollar 1MDB corruption scandal involving Malaysia’s sovereign wealth fund.
The settlement, disclosed in a filing submitted on Wednesday to a federal court in Manhattan, marks one of the latest legal consequences stemming from the global financial scandal that shook international banking and political institutions.
Reuters cited on Friday that the shareholder action was led by Swedish pension fund Sjunde AP-Fonden, which accused Goldman Sachs of concealing the true nature of its dealings with 1Malaysia Development Berhad (1MDB) while publicly portraying its internal compliance and risk controls as robust and effective.
Although both parties confirmed last month that an agreement had been reached, the financial terms were only revealed in the latest court filing.
“The settlement is an outstanding result for the class,” lawyers representing the shareholders said in the filing.
The settlement remains subject to approval by a federal judge.
Neither Goldman Sachs’ legal representatives nor a spokesperson for the bank immediately responded to requests for comment following the filing.
The scandal centres on 1MDB, which was established by former Malaysian prime minister Datuk Seri Najib Razak as part of a strategy to promote national economic development.
Authorities in both the United States and Malaysia later alleged that approximately US$4.5 billion was siphoned from the fund through a vast network of offshore accounts and shell companies allegedly linked to fugitive financier Jho Low.
Goldman Sachs played a key role in arranging US$6.5 billion worth of bond sales for 1MDB and reportedly earned an estimated US$600 million in fees from the transactions.
Shareholders alleged that the bank misled investors about its exposure to the scandal and failed to disclose the extent to which it had allegedly “actively facilitated – and handsomely profited from” the fraudulent scheme.
The lawsuit further argued that Goldman’s share price declined sharply once investors became aware of the bank’s alleged involvement in the scandal and the growing international investigations surrounding the bond deals.
In 2020, Goldman Sachs agreed to pay US$2.9 billion in penalties to settle investigations brought by the US Department of Justice and other international regulators over the affair.
As part of that settlement, a Malaysian subsidiary of the bank admitted criminal wrongdoing linked to the scandal.
A federal judge in Brooklyn formally closed the United States criminal case against Goldman Sachs in May 2024 after the bank completed a three-year deferred prosecution agreement.
The scandal also led to criminal proceedings against former Goldman bankers involved in the transactions, with one banker convicted for helping siphon funds from 1MDB while another pleaded guilty in connection with the scheme. - May 22, 2026
