NEW YORK: Goldman Sachs Group Inc.'s reputation is facing one of its biggest crises over the decade – and now…
NEW YORK: Goldman Sachs Group Inc.’s reputation is facing one of its biggest crises over the decade – and now its shares are also.
As prosecutors involved a trio of Goldman Sachs bankers in a multibillion dollar malaysian fraud early this month, investors have endured a nearly daily dump of news about the company’s ties to the scandal. Barrage culminated Monday when the country’s finance minister demanded “full repayment” and tipped Goldman’s shares to its biggest drop since 2011.
Over Wall Street, analysts expressed surprise over the dive and noted the bank ̵
1; which has not been loaded with incorrect action – may probably stomach someone payment that can be recovered in the case. Instead, some suggested that the decline seemed to be a combination of concern over the constantly tough headlight and the uncertainty about what will come. It was also a generally bad day in American markets.
“It’s not that much dollar amount,” said Gerard Cassidy at RBC Capital Markets. “It’s more that we do not know all the facts yet, we do not know all the important points in history right now. That’s the fear of the unknown.”
On November 1, at least three leading Goldman Sachs banks were publicly involved by US Justice Department in a perennial criminal company that included officials in Malaysia and elsewhere and washed hundreds of millions of dollars. The company has said that it cooperates with the investigations and may face “significant” fines.
The bank spent years repairing its image after it became a favorite Congress Stamp in 2010 for its behavior on the global credit crunch. That same year, US regulatory authorities accused the bank of cheating investors by not revealing that a hedge fund betting against a mortgage-linked derivative had played a role in creating what they bought. The bank acknowledged that it made a “mistake” in marketing materials and declined.
Malaysia probe focuses on the country’s scandalized state-owned investment company, 1Malaysia Development Bhd. And the $ 6.5 billion raised in 2012 and 2013. Goldman Sachs handled the deal and harvested nearly $ 600 million in fees.
Tim Leissner, the former president of Southeast Asia, admitted in a remark that he mutated officials to get the deal and that he and others arranged the collection as a debt victim to generate higher fees. He also acknowledged that more than $ 200 million in revenue from 1MDB bonds flows to accounts managed by him and a relative.
Prosecutors have said that senior executives circumvented the bank’s internal agreement to avoid detection.
Malaysian Finance Minister Lim Guan Eng on Monday said that the country is seeking repayment of all fees it has paid. A bank spokesman refused to comment on the demand.
The company’s shares tripled 7.5 percent, their biggest daily drop since November 2011. The volume of purchased and sold shares was more than tripled the average. The bank was the worst artist in Dow Jones Industrial Average on a day when all but four companies in the index dropped.
Goldman’s processual risks in the US include trial and probes with estimated costs that could rise above $ 2 billion, including more Bloomberg Intelligence analyst Elliott Z. Stein and Jennifer Rie wrote in a report on Monday.
Goldman Sachs has said it believed that the debt it submitted was for development projects and that Leissner held information from the company. Leissner has said that Goldman’s secret culture led him to conceal mistakes from the company’s compliance staff.
Managing Director David Solomon, who took over last month, said he had found the charges against the former employees “very distressed”. His predecessor Lloyd Blankfein, Goldman’s current chairman, was asked earlier this month what the scandal meant for the bank’s reputation. He killed: “Well, that’s not good.” – Bloomberg