The Goldman Sachs Group, Inc.
- Company Name
- The Goldman Sachs Group, Inc.
- Stock Symbol
- Class Period
- February 28, 2014 to December 17, 2018
- Motion Deadline
- February 18, 2019
- Southern District of New York
The complaint charges Goldman and certain of its officers with violations of the Securities Exchange Act of 1934. Goldman operates as an investment banking, securities, and investment management company worldwide, serving corporations, financial institutions, governments, and high-net-worth individuals. Goldman’s business in Malaysia included, inter alia, raising funds for 1Malaysia Development Bhd. (“1MDB”).
1MDB is a Malaysian state-owned investment fund set up in 2009 to finance infrastructure and economic deals in Malaysia. Since early 2015, 1MDB has been the subject of international criminal and regulatory investigations for suspected fraud and money laundering after 1MDB missed $11 billion in payments owed to banks and bondholders. According to the U.S. Department of Justice, high-level 1MDB officials misappropriated an estimated $4.5 billion from 1MDB between 2009 and 2014. Implicated in the scandal were two former Goldman managing directors, Tim Leissner and Ng Chong Hwa.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and operations, including that Goldman had participated in a fraud and money-laundering scheme in collusion with 1MDB, and that when revealed, this conduct would foreseeably subject Goldman to heightened regulatory investigation and enforcement. As a result of this information being withheld from investors, Goldman shares traded at artificially inflated prices of more than $270 per share during the Class Period.
On November 1, 2018, federal prosecutors unsealed indictments against Leissner and Ng related to the 1MDB probe, explicitly describing them as “agents acting within the scope of their employment on behalf of” the Company “with the intent, at least in part, to benefit” Goldman. The prosecutors also stated that “Leissner has been ordered to forfeit $43,700,000 as a result of his crimes.” On November 8, 2018, Bloomberg reported on the personal involvement of Goldman’s then-CEO, Lloyd Blankfein, in a meeting to establish ties with Malaysia and its new sovereign wealth fund. On this news, Goldman’s stock price fell nearly 4%.
On November 12, 2018, Malaysian government officials denounced Goldman’s role in the 1MDB scandal, stating that “[t]here is evidence that Goldman Sachs has done things that are wrong” and “[o]bviously we have been cheated through the compliance by Goldman Sachs people.” Meanwhile, the country’s Finance Minister said that Malaysia would seek a “full refund” of the approximately $600 million in fees that Goldman had earned in connection with a $6.5 billion 1MDB bond deal. Following this news, the price of Goldman stock fell $16.60 per share, or nearly 7.5%, to close at $206.05 on November 12, 2018.
Then on December 17, 2018, it was reported that Malaysia had filed criminal charges against Goldman and two former executives for their roles in the 1MDB fraud and money-laundering scandal. The same day, Goldman denied any wrongdoing through its spokesman, who stated: “We believe these charges are misdirected and we will vigorously defend them and look forward to the opportunity to present our case . . . .” On this news, the price of Goldman shares fell $4.76 per share, or more that 2.75%, to close at $168.01 per share on December 17, 2018.