Reuters, NEW YORK, June 28 – A US judge on Monday ordered Goldman Sachs Group Inc (GS.N) and two former top executives to face a lawsuit accusing them of misleading shareholders about the bank’s work for 1MDB, a Malaysian fund mired in a corruption scandal. Shareholders in the proposed class action adequately alleged that several statements by Goldman, former Chief Executive Lloyd Blankfein, and former Chief Operating Officer Gary Cohn about 1MDB and Goldman’s ethics were false and misleading, according to U.S. District Judge Vernon Broderick in Manhattan. Sjunde AP, a Swedish pension fund, is the largest shareholder. – As the facts about Goldman’s 1MDB dealings became public, Fonden claimed that Goldman’s market value plummeted by billions of dollars. Maeve DuVally, a representative for Goldman Sachs, declined to comment. Requests for response from the other defendants’ lawyers were not immediately returned. Similar requests were not promptly responded to by the shareholders’ counsel. Goldman agreed to pay $2.9 billion in penalties and have a Malaysian unit admit criminal wrongdoing to settle 1MDB probes by the US Department of Justice and other authorities on Oct. 22. Broderick’s decision came after Goldman agreed to pay $2.9 billion in penalties and have a Malaysian unit admit criminal wrongdoing to settle 1MDB probes by the US Department of Justice and other authorities. Goldman helped 1MDB, a sovereign wealth fund founded by former Malaysian Prime Minister Najib Razak to promote economic development, sell $6.5 billion in bonds and earned an estimated $600 million in fees. Authorities from the fund and their associates allegedly plundered bond revenues for pleasures and to fund Hollywood films, while Goldman bankers allegedly paid Malaysian and Abu Dhabi officials to secure 1MDB business. Broderick said Goldman’s argument that it had no evidence that funds were being skimmed “stretches credulity,” and that shareholders might sue the bank over its claim that it was “committed to completely adhering with the word and spirit of the laws, rules, and ethical principles that govern us.” He also suggested that shareholders could try to show that Blankfein ignored internal 1MDB warnings before informing a journalist in November 2018 that he was “unaware” of red flags. Broderick also dismissed all charges against Harvey Schwartz, who took over as Goldman’s co-chief operating officer when Cohn resigned. Sjunde AP-Fonden v. Goldman Sachs Group Inc et al, No. 18-12084, U.S. District Court, Southern District of New York. Jonathan Stempel contributed reporting from New York, and Himani Sarkar edited the piece. The Thomson Reuters Trust Principles are our standards. Continue reading
