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Goldman Sachs' profit almost wiped out by 1MDB fine

By Sean Farrell

Date: Friday 07 Aug 2020

Goldman Sachs' profit almost wiped out by 1MDB fine

(Sharecast News) - Goldman Sachs has almost wiped out its bumper second-quarter profit by setting aside an extra $2bn (£1.5bn) for legal costs related to the 1MDB scandal in Malaysia.
The extra charge was included in the bank's final quarterly accounts lodged with the Securities and Exchange Commission on Thursday.

The provision almost swallowed up the $2.25bn profit Goldman reported for the second quarter as trading revenue soared during the Covid-19 crisis.

Under the heading "subsequent event", Goldman revealed the provision for litigation and regulatory proceedings in the second quarter, reducing net earnings to $197m.

The bank agreed a $3.9bn settlement with Malaysia in July over losses the country suffered from a multibillion dollar fraud at its state investment fund. The agreement included a $2.5bn cash payment.

US authorities have accused two former Goldman bankers of working with a fraudster to siphon money from the fund to buy luxury property, art and other items. The bank has said it was deceived by one of the bankers, Tim Leissner, who has pleaded guilty to US criminal charges.

Goldman is seeking to settle a case with the US Department of Justice (DOJ) over the 1MDB scandal in which much of the $6.5bn Goldman helped raise was looted.

"The firm is ... engaged in discussions with the DOJ, various US regulatory authorities and various non-US regulatory authorities outside Malaysia with respect to potential resolution of their investigations and proceedings," the bank said in its filing. "These discussions, which are being principally led by the DOJ, are progressing."


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