Goldman Sachs Shares Sink After Malaysian Authorities File Charges Over 1MBD Scandal

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS)

Goldman Sachs Group Inc. stock was down $3.67, or 2.12% to change hands at $169.10 before the opening bell on Monday.

The drop came after reports that Malaysian authorities have filed criminal charges against the U.S. banking giant and several of its former employees over the 1Malaysia Development Bhd (1MDB) financial scandal.

Malaysia is accusing Goldman subsidiaries and ex-employees Roger Ng Chong Hwa and Tim Leissner of embezzling $6.5 billion, giving false statements and bribing officials who were helping to arrange bonds for 1MDB state fund. Mr. Leissner served as chairman of Goldman in South East Asia and left the bank two years. On the hand, Mr. Ng served as the managing director of the investment bank until 2014.

Other former employees that Malaysia is seeking to prosecute include Low Taek Jho and Jasmine Loo Ai Swan. The former is still at large, but his legal team still maintains that he is clean. However, authorities have since sold a yacht he purchased for $250 million.

The U.S. served Mr. Low, Mr. Leissner and Mr. Ng with criminal charges last month in relation to 1MDB. Mr. Leissner later pleaded guilty to conspiring to violate anti-bribery laws and launder money. Prosecutors said Mr. Leissner and Mr. Ng conspired with Mr. Low to bribe government officials to ensure than Goldman Sachs won the 1MDB project.

Malaysia also says that directors and employees of Goldman Sachs benefitted from the alleged embezzlement through enhanced career prospects and huge bonuses. Goldman Sachs has dismissed the charges terming them as “misdirected”.

The bank said it would “vigorously defend them”, but added it will still continue to cooperate with all the authorities that are investigating the scandal. GS stock decline pushed the Dow Jones Industrial Average 26 points lower, while Dow futures shed more than 81 points.