Malaysia has filed criminal charges against Goldman Sachs and two former bankers in connection with a corruption and money laundering investigation at the state-owned investment fund 1 Malaysia Development Berhad (1MDB).
Goldman Sachs has been under scrutiny for its role in helping to raise funds for the 1MDB.
The US bank is being investigated in at least six countries.
Goldman Sachs called the charges “misdirected” and said it would “vigorously defend them”.
The bank added: “The firm continues to co-operate with all authorities investigating these matters.”
Malaysia filed the charges against Goldman Sachs and its former employees Tim Leissner and Roger Ng.
Tim Leissner served as Goldman’s South East Asia chairman, and left the bank in 2016. Roger Ng was a managing director at Goldman until his departure in May 2014.
Malaysia has also brought charges against former 1MDB employee Jasmine Loo and financier Jho Low.
Malaysia’s attorney general Tommy Thomas said in a statement: “The charges arise from the proceeds of three bonds issued by the subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs.”
Last month, Tim Leissner, Roger Ngand and Jho Low were served with criminal charges in the US in relation to 1MDB.
Tim Leissner pleaded guilty in the US to conspiring to launder money and violating anti-bribery laws.
In that case, prosecutors said Tim Leissner and Roger Ng worked with Jho Low to bribe government officials to win 1MDB business for Goldman Sachs.
US authorities said billions of dollars were embezzled from the state fund to buy art, property, a private jet- and even to help finance the Wolf ofWall Street movie starring Leonardo DiCaprio.
The scandal has prompted investigations around the world and played a role in the election defeat earlier this year of Malaysia’s former PM Najib Razak, who is accused of pocketing $700 million from the fund he set up.
Goldman Sachs has reported a 50% jump in profit in Q3 2014 after a sudden jolt in bond market activity helped boost revenues.
The investment bank reported net income rose to $2.14 billion in the three months to the end of September.
That compared with $1.43 billion for the same period a year earlier.
Revenue from bond-trading leapt 74% to $2.17 billion, as Goldman benefited from the surprise exit of bond market supremo, Bill Gross, from Pimco.
The departure of Bill Gross from Pimco, the world’s largest bond fund, prompted investors to withdraw $23.5 billion from the company.
Goldman Sachs has reported a 50 percent jump in profit in Q3 2014 after a sudden jolt in bond market activity helped boost revenues
Strong US economic data in September and stimulus measures introduced by the European Central Bank (ECB), also helped jolt what had been a lacklustre bond market into life last month.
Total net revenue at the bank rose 25% to $8.39 billion.
“The combination of improving economic conditions in the US and a strong global franchise continued to drive client activity across our diverse set of businesses,” Goldman’s chairman and chief executive Lloyd Blankfein said in a statement.
Goldman Sachs has also been a big beneficiary of rising stock markets this year, helped by its advisory work on large deals including the $25 billion initial public offering of Chinese tech firm Alibaba on the US stock market.
Revenue from investment management, a business Goldman has been trying to build up, rose 20% to $1.46 billion.
Goldman Sachs has reported a 7% rise in its profits during Q1 2013 following a strong performance in its investment banking division.
The company made $2.26 billion net profits, a 7% rise comparing with Q1 2012.
The investment banking division made $1.57 billion, a 36% rise, during the period.
Goldman Sachs’ total revenue rose just 1% to $10.1 billion. The figures were ahead of analysts’ expectations.
Earnings at the company’s equity arm fell 15% to $1.92 billion, which mostly reflecting a slowdown in trade executions and volumes on behalf of its clients.
Goldman Sachs has reported a 7 percent rise in its profits during Q1 2013 following a strong performance in its investment banking division
“We are pleased with our performance for the quarter,” said Lloyd C Blankfein, chairman and chief executive.
“Our strong client franchise across our businesses drove generally solid results.
“Still, the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital.”
Credit ratings agency Moody’s has decided to downgrade 15 global banks and financial institutions.
In the US, Bank of America and Citigroup were among those marked down.
The UK banks downgraded were Royal Bank of Scotland, Barclays and HSBC. Lloyds also had its rating cut by Moody’s in a separate announcement.
The other institutions that have been downgraded are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank and Royal Bank of Canada.
Moody’s added that it was putting some of the banks on a negative outlook, which is a warning that they could be downgraded again in the future.
Explaining this, it said governments around the world had shown a “clear intent” to reduce their support for banks going forward.
Credit ratings agency Moody's has decided to downgrade 15 global banks and financial institutions
In Friday trading, shares in Royal Bank of Scotland (RBS) were up 0.8%, HSBC had gained 0.6%, and Barclays had risen 0.5%. Lloyds was 1.6% higher.
In France and Germany, Societe Generale was up 2.1%, while shares in Deutsche Bank were flat.
In a statement, RBS responded to its downgrade saying: “The group disagrees with Moody’s ratings change, which the group feels is backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile.”
RBS estimated that the downgrade could mean it would need to find an extra £9bn in collateral for its debts.
Lloyds said it believed that the change would have “limited impact on our funding costs and market capacity”.
In the US, Citigroup said it “strongly disagrees” with Moody’s decision.
Of the banks downgraded, four were cut by one notch on Moody’s ranking scale, including HSBC, Royal Bank of Scotland, and also Lloyds.
A further 10 banks had their rating reduced by two notches, including Barclays. Credit Suisse was lowered by three notches.
Moody’s separates the 15 banks into three groupings, relative to its assessment of their resilience to any global financial market turmoil.
It puts HSBC in its strongest “first group”, together with Royal Bank of Canada and JP Morgan.
Moody’s says these banks have “stronger buffers” than many of their peers, and “generally more stable businesses”.
Barclays is in its “second group” of banks which Moody’s says faces “sometimes adverse factors”. Other banks at this level are BNP Paribas and Goldman Sachs.
RBS is in the bottom “third group”, which comprises banks which “have been affected by problems in risk management, or have a history of high volatility”. Other banks in this grouping include Bank of America and Citigroup.
Amid a flurry of lawsuits over Facebook’s IPO, Morgan Stanley, the company’s top underwriter, says it’s prepared to pay back investors who were burned when they bought shares.
Morgan Stanley announced in a memo on Wednesday that it is reviewing Facebook trades and would adjust prices for some retail customers who overpaid.
The IPO mishaps have sparked numerous lawsuits against Morgan Stanley, the NASDAQ stock exchange and Facebook itself by shareholders who claimed they hid the social networking company’s weakened growth forecasts just before it went public.
The allegations raised questions about whether top investors profited at the expense of smaller buyers.
Meanwhile, Facebook is in talks with the New York Stock Exchange to move its stock from the NASDAQ Stock Market after the botched IPO on Friday, according to a person familiar with the matter.
The person spoke on the condition of anonymity because they were not authorized to speak publicly.
Facebook’s much-anticipated IPO was delayed by a half-hour on Friday because of technical glitches on the NASDAQ.
Morgan Stanley announced in a memo on Wednesday that it is reviewing Facebook trades and would adjust prices for some retail customers who overpaid
After pricing at $38, Facebook’s stock closed up 23 cents on Friday and has been down since. On Wednesday, it closed up $1, at $32, still down nearly 16% from the IPO price.
NYSE declined to comment.
The news comes as even Facebook CEO Mark Zuckerberg dumped his own shares in the company, making $1.13 billion as the stock nosedived, according to company filings.
On Wednesday, shareholders filed a lawsuit against Facebook and the banks behind the company’s stock, Morgan Stanley and Goldman Sachs.
Additionally, both the Securities and Exchange Commission and the Financial Industry Regulatory Authority have begun looking into the matter.
The U.S. Senate Banking Committee has also launched an inquiry and the state of Massachusetts has subpenaed Morgan Stanley, demanding answers.
The House Financial Services Committee said that it was also gathering information for their own review.
Facebook stock rose 3.3% in trading on Wednesday, rising to $32 a share.
However, a new analysis said the stock could fall to as low as $9.59.
That’s a far cry from the $37.58 that Zuckerberg fetched for 30.2 million shares he unloaded on Friday.
By the end of trading on Tuesday however the price had dropped to $31 meaning Zuckerberg saved himself a cool $174 million by getting out early.
Mark Zuckerberg, 28, still holds a vast amount of Facebook stock but his decision to sell off so much will leave investors wondering about his confidence in the company.
The drop is based around the realization that Facebook might not be growing as quickly as initially thought. And the company’s second-quarter growth will likely fall short of expectations as fewer new users join the social networking giant.
Shareholders filed a lawsuit on Wednesday, alleging that Mark Zuckerberg, Facebook and the banks that backed the Initial Public Offering, Morgan Stanley and Goldman Sachs, knew this information, but weren’t forthcoming with it.
On Tuesday, Reuters revealed that the banks’ analysts downgraded their estimates about the future earnings of the company while they were rolling out the IPO.
Business Insider called the move “unprecedented”.
Furthermore, the website reported that the banks revealed to privileged major investors that the share price was likely to tank, but left smaller stock buyers in the dark about this information.
The Securities and Exchange commission is investigating these allegations and the state of Massachusetts has filed a subpoena demanding Morgan Stanley release information about the IPO.