Goldman Sachs settles shareholder lawsuit over 1MDB scandal

By Jonathan Stempel

NEW YORK, ‌April 22 (Reuters) - Goldman ​Sachs ​has agreed to settle a class-action lawsuit accusing the Wall Street bank of defrauding shareholders about its work ‌for 1MDB, a Malaysian sovereign wealth fund that became embroiled ⁠in a corruption scandal.

In a letter filed on Wednesday in Manhattan federal court, ‌Goldman and the shareholders said ‌they reached an agreement-in-principle to settle, and plan to submit a settlement for preliminary approval by May 20.

Goldman declined to comment. ​Lawyers for shareholders led by the Swedish pension fund Sjunde AP-Fonden did not immediately respond to requests for comment. Terms were ⁠not disclosed.

Former Malaysian Prime Minister Najib Razak set up 1MDB to promote economic development, with ​help from Malaysian financier Jho Low, who is now a fugitive.

U.S. and Malaysian authorities have said $4.5 billion was ​siphoned away from 1MDB, with some ‌diverted to offshore bank accounts and shell companies linked to Low.

Goldman helped 1MDB sell $6.5 billion of bonds, ⁠and collected an estimated $600 million of fees.

Shareholders accused the bank of lying about its role in the fraud while repeatedly touting its supposedly robust risk ⁠management.

They said Goldman's share price tumbled after investors realized Goldman "actively facilitated - and handsomely ​profited from" the fraud.

Goldman agreed in 2020 to pay $2.9 billion in penalties and have a Malaysian unit admit criminal wrongdoing to settle 1MDB probes by the ‌U.S. Justice Department and other authorities.

A Brooklyn, New York judge formally ended the U.S. criminal case against ‌Goldman in May 2024, after the bank successfully completed a three-year deferred ⁠prosecution agreement.

One Goldman banker was ‌convicted of helping loot ​1MDB, and another pleaded guilty.

(Reporting by Jonathan Stempel in New York; Additional reporting by Saeed Azhar; Editing by ‌Will Dunham)

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