Goldman Sachs Group Inc could end up paying less than $2 billion to resolve US criminal and regulatory probes over its role in raising money for scandal-ridden Malaysian investment fund 1MDB, said three people familiar with the negotiations.
The justice department and other federal agencies, in internal discussions held in recent weeks, have weighed seeking penalties between $1.5 billion and $2 billion, the people said. That’s less than what some analysts have signalled Goldman might have to pay. While a settlement could be announced as soon as next month, the terms could change before a deal is finalised, said the people who asked not to be named in discussing private negotiations.
The bulk of the penalties would be paid to the Justice Department. Attorney General William Barr has directly immersed himself in the case, according to another person familiar with the matter. Earlier this year, Barr obtained a waiver to let him oversee the investigation, even though his former law firm, Kirkland & Ellis LLP, is representing Goldman. It’s unclear whether the justice department is seeking a guilty plea from the bank.
A justice department spokesman declined to comment, as did spokesmen for the Federal Reserve and securities and exchange commission, which have been pursuing civil investigations into Goldman. The bank reiterated its previous statements that it continues to cooperate with authorities.
Goldman Sachs shares climbed as much as 3.1% on the discussions, the biggest intraday gain in almost two months. The bank’s stock is up 33% this year.
Goldman’s involvement with 1MDB has triggered one of the biggest blows to its reputation in recent years, leading to a litany of investigations and embarrassing revelations of a former banker bribing government officials. The Wall Street firm has been eager to move past the scandal, and a US settlement below $2 billion would put it on track to avoid the worst-case scenario that some analysts pegged at as much as $9 billion in global fines.
Goldman is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much lower figures than their public stance of wanting to recover $7.5 billion. Goldman is still privately seeking to reduce its sanctions, arguing that the crimes were committed by a rogue employee and the bank wasn’t aware of the misconduct.
In 2012, HSBC Holdings Plc set a new bar when it agreed to pay more than $1.9 billion to settle allegations that it violated sanctions and enabled money laundering. BNP Paribas SA was then hit with the largest financial penalty ever in a US criminal case when it paid $9 billion.