GS Goldman Sachs Group Inc

By WSJ staff 

A Hong Kong regulator fined a local unit of Goldman Sachs Group Inc. $350 million for the investment bank's role in a multibillion-dollar scandal involving Malaysian investment fund 1MDB.

The Securities and Futures Commission said Thursday it is fining Goldman Sachs (Asia) LLC for what it described as the unit's "serious regulatory failures" related to the misappropriation of $2.6 billion from 1MDB bond offerings in 2012 and 2013.

The regulator said Goldman Sachs Asia lacked adequate controls to monitor staff and detect misconduct, and allowed the 1MDB bond offerings to proceed when numerous red flags surrounding the offerings had not been properly scrutinized.

It said the unit had received about 37% of the total revenue of $567 million generated from the bond offerings--the largest share among various Goldman entities involved in the deal.

Goldman said it would release a statement on the matter in due course.

The fine comes as the Wall Street bank is finalizing a settlement with the U.S. Department of Justice in which it will pay about $2.8 billion and admit wrongdoing to end a bribery probe related to 1Malaysia Development Bhd., or 1MDB, The Wall Street Journal reported earlier this week.

U.S. prosecutors have accused an international cast of characters--including two Goldman bankers--of embezzling billions of dollars from 1MDB, and U.S. officials had been preparing a case alleging that the bank ignored signs of fraud in pursuit of fees.

In July, the bank agreed to pay the Malaysian government at least $2.5 billion to resolve a parallel investigation there.

(END) Dow Jones Newswires

October 22, 2020 06:57 ET (10:57 GMT)

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