In the Matter of The Goldman Sachs Group, Inc. (2020)
Case Details
- Case Name
- In the Matter of The Goldman Sachs Group, Inc. (2020)
- Foreign Official
- Unnamed Malaysian and Abu Dhabi government officials.
- Date of Conduct
-
2009 to 2014
- Nature of Business
- The Goldman Sachs Group Inc. (“Goldman Sachs”) is a global financial institution headquartered in the United States. Goldman Sachs maintains common stock publicly traded on the NYSE and registered with the SEC pursuant to Section 12(b) of the Exchange Act.
- Influence to be Obtained
- According to the SEC, from 2009 to 2014, individuals at Goldman Sachs perpetrated a scheme to pay bribes to high-ranking Malaysian and Abu Dhabi government officials to obtain business for GS in violation of the FCPA’s anti-bribery, books and records, and internal controls provisions. The business sought included securing a role in underwriting approximately $6.5 billion in bond deals for 1Malaysia Development Bhd. (“1MDB”), a state-owned fund for investment and development projects. GS earned hundreds of millions in fees for the bond deals.
According to the SEC, a “substantial portion” of approximately $6.5 billion in capital raised by 1MDB was diverted from the fund and used to pay bribes to government officials to obtain business for GS. As we previously reported, these funds were misappropriated by Low Taek Jho, a Malaysian national who worked as an intermediary between 1MDB and other foreign government officials, and two managing directors at GS responsible for GS’s relationship with 1MDB, Ng Chong Hwa, a Malaysian national, and Tim Leissner, a German national. In December 2019, the SEC charged Leissner for violating the anti-bribery, books and records, and internal controls provisions of the FCPA.
According to the SEC, GS failed to maintain “a sufficient system of internal accounting controls” when reviewing and approving the bond deals, resulting in GS’s failure to adequately document approval processes, follow-up, oversee, and conduct due diligence concerning the bond deals. Further, the SEC stated that the group responsible for ensuring that follow-up items were completed before the deals closed did not, “due to weaknesses in the implementation of this control,” document follow-up consistent with the committee that reviewed and approved the bond deals. The SEC noted that the committee served a “vital control function” in relation to “large, significant and complex transactions” and “significant commitments of firm capital,” such as the bond deals.
- Enforcement
- On October 22, 2020, the SEC settled its enforcement action against GS for violating the anti-bribery, books and records, and internal controls provisions of the FCPA. GS agreed to a cease-and-desist order and to pay a civil money penalty of $400 million and disgorgement of $606 million.
On October 22, 2020, the DOJ entered into a three-year deferred prosecution agreement with GS, pursuant to which GS agreed to pay a criminal monetary penalty of $1.26 billion. GS Malaysia pleaded guilty to a one-count information charging conspiracy to violate the FCPA. GS Malaysia’s $500,000 criminal monetary penalty is included in the $1.26 billion total.
The DOJ and SEC settlements are part of a coordinated resolution with various law enforcement agencies for $3.17 billion. Both the DOJ and SEC have agreed to credit the disgorgement amount to GS’s payment to the Government of Malaysia.
- Amount of the Value
- About $1.6 billion.
- Amount of Business Related to Payment
- About $6.5 billion.
- Intermediary
- Third-party agents.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 1,010,000,000
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 3,170,000,000
Defendants
The Goldman Sachs Group, Inc.
- Citation
- In the Matter of The Goldman Sachs Group, Inc., Admin. Proc. File No. 3-20132 (October 22, 2020).
- Other Statutory Provision
- None.
- Disposition
- Cease-and-Desist Order, Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- About $1.01 billion.
