Hong Kong’s Securities and Futures Commission (SFC) has reprimanded and fined Goldman Sachs (Asia) LLC, the Asian division of the New York-headquartered investment bank, $350 million for its involvement in the 1Malaysia Development Berhad (1MDB) scandal.
This came only days after the reports of a massive $2 billion fine by the United States’ Department of Justice on the investment bank for the lapses on the same multi-billion-dollar scandal.
As Finance Magnates explained earlier, the scandal involved the misappropriation of $2.6 billion from the $6.5 billion raised by the state-fund. It involved wrong-doings by close aides of former Malaysian prime minister, Najib Razak, which created a massive stir in the country’s domestic politics.
Goldman Sachs was at the center of the scandal as it helped the fund in three bond offerings in 2012 and 2013. The bank generated $567 million as commissions from these offerings.
The Hong Kong regulator pointed out the serious lapses and deficiencies in its management supervisory, risk, compliance, and anti-Money Laundering controls that led to the misappropriation.
Additionally, the Asian division of the investment bank had ‘significant involvement in the origination, approval, Execution , and sales process’ in the offerings and received $210 million from the commissions.
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“The penalty in this case – assessed solely in accordance with Hong Kong’s own fining framework – reflects our findings that Goldman Sachs Asia failed to deal properly with numerous suspicious circumstances surrounding the 1MDB bond offerings,” SFC CEO, Ashley Alder said.
Paying Billions in Fines
Earlier, Goldman Sachs settled with the prosecutors in Malaysia, paying a fine of $2.5 billion, and is also in talks with the authorities in Singapore. The bank is avoiding criminal proceedings in the countries by paying the fines.
“Goldman Sachs Asia fell far short of the standards expected of a licensed intermediary in the 1MDB case and suffered not only reputational damage from its own failures, but also brought the securities industry into disrepute,” Thomas Atkinson, the SFC’s executive director of enforcement, added.
