A U.S. judge has ordered Goldman Sachs and two former executives to face a lawsuit over misleading shareholders about the bank’s work for Malaysian sovereign wealth fund 1MDB.
A proposed class action by shareholders – led by Swedish pension fund Sjunde AP-Fonden – accused Goldman Sachs alongside former chief executive Lloyd Blankfein and former chief operating officer Gary Cohn for issuing false and misleading statements about 1MDB and the bank’s ethics.
Manhattan-based U.S. District Judge Vernon Broderick said the statements «strains credulity» for Goldman and that shareholders could sue the bank over claims that it was «dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us».
Broderick also said that shareholders could try to prove that Blankfein ignored internal warnings about 1MDB before telling a journalist in November 2018 that he was «not aware» of red flags and dismissed all claims about Harvey Schwartz, Goldman co-COO after Cohn’s departure.
1MDB Spotlight
The latest court order against Goldman Sachs follows numerous 1MDB-linked legal setbacks for the bank including regulatory fines totaling $3.2 billion worldwide and admission to criminal wrongdoing from a Malaysia unit.
Other banks have also recently been spotlighted such as J.P. Morgan Deutsche Bank and Coutts which face civil suits as part of 1MDB’s asset recovery campaign.
