HONG KONG: Hong Kong’s markets watchdog on Thursday fined Goldman Sachs’s Asian business US$350 million (RM1.45 billion) for its role in Malaysia’s multibillion-dollar 1MDB scandal, the largest single fine ever levied by the regulator in the Asian financial hub.
The Securities and Futures Commission (SFC) said serious lapses and deficiencies in management controls at Goldman Sachs (Asia) LLC had contributed to the misappropriation of US$2.6 billion raised by the Malaysian sovereign wealth fund.
1Malaysia Development Bhd (1MDB) raised the funds in three bond offerings in 2012 and 2013.
A Goldman Sachs spokesman said the Wall Street bank would issue a statement in due course.
The 1MDB scandal has been a costly and long-running sore for the US investment bank, though there are signs it may be close to drawing a line under the affair.
In July, Goldman agreed to pay US$3.9 billion to settle Malaysia’s criminal probe.
Malaysian and US authorities estimate US$4.5 billion was stolen from 1MDB in an elaborate scheme that spanned the globe.
The three bond offerings, which raised a combined US$6.5 billion, were arranged and underwritten by UK-based Goldman Sachs International, with work conducted by deal team members in multiple jurisdictions, who shared the revenue generated.
The SFC said Goldman Sachs Asia, the bank’s Hong Kong-based compliance and control hub for the region, had significant involvement in the origination, approval, execution and sales process of the three bond offerings.
The bank’s Asia hub had earned US$210 million from the offerings, the largest share among the various Goldman entities.
âGoldman Sachs Asia fell far short of the standards expected of a licensed intermediary in the 1MDB case and suffered not only reputational damage from its own failures, but also brought the securities industry into disrepute,â said Thomas Atkinson, the SFCâs executive director of enforcement in the statement.
“This enforcement action is the result of a rigorous, independent investigation conducted by the SFC,” said Ashley Alder, the SFC’s chief executive.
Thursday’s fine from the SFC dwarfed the previous record of US$51 million, which it levied on a private banking unit of HSBC in 2017, and on UBS last year. â Reuters
