Goldman Sachs Group Inc was called on by Malaysia’s market regulator to defend its role in transactions involving troubled state fund 1Malaysia Development Bhd (1MDB) at the risk of administrative sanctions.
The Securities Commission Malaysia (SC) sent a show-cause letter to the bank’s Malaysian unit in December, asking Goldman Sachs to explain why such action shouldn’t be taken against the bank, the regulator said in a statement last Friday.
The commission has the power to impose administrative sanctions and undertake civil enforcement proceedings, as well as criminal prosecutions, the statement added.
A spokesman for Goldman Sachs declined to comment.
Goldman Sachs is already facing criminal charges in Malaysia, which alleged in December that the New York-based lender misled investors in arranging US$6.5 billion (RM26.59 billion) of bond sales for 1MDB.
The US-based bank has pledged to vigorously defend against the accusations, saying that former Malaysian officials lied to the bank about how proceeds from the bond sale would be used.
The SC, which has stepped up probes related to 1MDB, will do a thorough assessment of Goldman Sachs’ response, and impose administrative sanctions if the bank fails to give a satisfactory explanation, it said.
The SC has also lent its investigating officers to help the public prosecutor build its separate case against the bank, it added.
In January, the SC imposed a RM2.2 million fine on Deloitte PLT, a former auditor of 1MDB units, for failing to immediately report irregularities in a sukuk sale that may have had a material effect on 1MDB’s ability to repay creditors. — Bloomberg