The Justice Department and other federal agencies, in internal discussions held in recent weeks, have weighed seeking penalties between $1.5 billion and $2 billion, the people said. That’s less than what some analysts have signaled Goldman might have to pay. While a settlement could be announced as soon as next month, the terms could change before a deal is finalized, said the people who asked not to be named in discussing private negotiations.
The bulk of the penalties would be paid to the Justice Department. Attorney General
A Justice Department spokesman declined to comment, as did spokesmen for the Federal Reserve and Securities and Exchange Commission, which have been pursuing civil investigations into Goldman. The bank reiterated its previous statements that it continues to cooperate with authorities.
Goldman Sachs shares climbed as much as 3.1% on the discussions, the biggest intraday gain in almost two months. The bank’s stock is up 33% this year.
Goldman’s involvement with 1MDB has triggered one of the biggest blows to its reputation in recent years, leading to a litany of investigations and embarrassing revelations of a former banker bribing government officials. The Wall Street firm has been eager to move past the scandal, and a U.S. settlement below $2 billion would put it on track to avoid the worst-case scenario that
Goldman is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much
If it pays anywhere close to $2 billion, Goldman would join other banks that have been subjected to massive U.S. penalties this decade. In 2012,
In previous international corruption cases, the U.S. has sometimes credited penalties paid to other countries for the same conduct. For example, a $1.3 billion U.S. settlement last year with Societe Generale SA included a credit of almost $300 million that was paid to French authorities.
1MDB became the hub of a global corruption and embezzlement scandal in which a massive amount of cash was allegedly diverted to corrupt officials and financiers. Goldman helped the state investment fund raise cash, with the Wall Street bank making about $600 million from $6.5 billion in bond sales in 2012 and 2013.
Money diverted from 1MDB was allegedly spent around the world, including on a super yacht, the Hollywood movie “The Wolf of Wall Street” and high-end real estate. Authorities in several countries have been working to recoup some of the missing billions and punish those involved.
There are signs that Goldman has made progress in its negotiations with U.S. agencies and may also have a sense of how much it might pay to settle the investigations.
For instance, Goldman stopped buying back its stock in the third quarter as it began discussions with U.S. authorities on 1MDB. Goldman later restarted its buybacks as talks with the government progressed and the firm added $300 million to its estimate of possible legal losses, Chief Financial Officer
Goldman has previously blamed Leissner for concealing his wrongdoing from the firm’s compliance efforts. Leissner has countered that the bank’s culture of secrecy led him to bypass compliance. U.S. authorities allege that in addition to Leissner, two other bankers were aware of the scheme, including one who went on to become the bank’s top dealmaker in the region.
Earlier this year, the Fed banned Leissner and his former deputy,
To contact the reporters on this story:
© 2019 Bloomberg L.P. All rights reserved. Used with permission.