Goldman Sachs is willing to pay a $2 billion penalty to resolve the 1MDB scandal

Goldman Sachs is currently negotiating with the U.S Justice Department regarding the 1MDB scandal. As per the sources, the American multinational investment bank has agreed to pay a $2 billion penalty for its role in the scandal.

Goldman Sachs’ Asian Subsidiary To Plead Guilty Of Violating U.S Antibribery Law

It was also reported that the negotiations haven’t yet been finalized, however, a deal is likely to be struck by the start of 2020. In the upcoming weeks, Goldman Sachs may see its Asian subsidiary accept the charges of violating the antibribery law of the United States.

The 1MDB scandal has haunted the investment bank and its CEO, David Solomon, since 2018. Goldman bankers were allegedly involved in a fraud that saw a Malaysian financier steal sizeable funds from the 1MDB investment fund. The investment fund was valued at $6.5 billion in total and was crucial to encouraging economic development in the country.

In a previous statement, Goldman had commented that only two of its ex-employees were involved in the fraud. Former Goldman partner, Tim Leissner, had accepted the charges in 2018. Leissner was barred from the finance industry last week and is no longer eligible to work in this niche.

Spokespeople from the U.S Department of Justice as well as from the investment bank have refused to comment on the news at this stage. According to the analysts, in an event that Goldman Sachs succeeds in closing the $2 billion deal with the U.S Justice Department, it’ll help the bank from containing the damage circling the international scandal. In the worst-case scenario, Mike Mayo of Wells Fargo remarked, the cost to resolve the scandal can go as up as $5 billion for Goldman Sachs.

Malaysian Authorities Imposed Criminal Charges On Goldman Sachs

The analysts further added that since it is expected to be the Asian subsidiary to plead guilty and not Goldman Sachs itself, it will help the investment bank minimize the potential risk to its global business.  

On the other hand, Goldman Sachs is also holding negotiations with Malaysian authorities to resolve the scandal. Malaysia has imposed criminal charges on the investment bank.

Despite the scandal, Goldman Sachs has held its strength in the stock market in 2019 with an incredible 37% gain this year. Following the news of negotiations with the U.S Justice Department and Malaysian Authorities, however, the stock noted a slight drop of 92 cents on Thursday as it closed the day around $229.55. The $231 level that was hit in the last week marked a year to date high for Goldman Sachs.