Kessler Topaz represents Sjunde AP-Fonden (“AP7”), one of Sweden’s largest pension funds, in a securities fraud class action against Goldman Sachs in the Southern District of New York. This case arises out of Goldman’s role in the 1Malaysia Development Berhad (“1MDB”) money laundering scandal, one of the largest financial frauds in recent memory.
In 2012 and 2013, Goldman served as the underwriter for 1MDB, the Malaysia state investment fund masterminded by financier Jho Low, in connection with three state-guaranteed bond offerings. In concert with Goldman, Low and other conspirators including government officials from Malaysia, Saudi Arabia and the United Arab Emirates ran an expansive bribery ring, siphoning $4.5 billion from the bond deals which Goldman peddled as investments for Malaysian state energy projects. In actuality, the deals were shell transactions used to facilitate the historic money laundering scheme. Nearly $700 million of the diverted funds ended up in the private bank account of Najib Razak, Malaysia’s now-disgraced prime minister who was convicted for abuse of power in 2020. Other funds were funnelled to Low and his associates and were used to buy luxury real estate in New York and Paris, super yachts, and even help finance the 2013 film “The Wolf of Wall Street.”
Goldman netted $600 million in fees for the three bond offerings—over 100 times the customary fee for comparable deals. In October 2020, the U.S. Department of Justice announced that Goldman’s Malaysia subsidiary had pled guilty to violating the Foreign Corrupt Practices Act (“FCPA”) which criminalizes the payment of bribes to foreign officials, and that Goldman had agreed to pay $2.9 billion pursuant to a deferred prosecution agreement. This amount includes the largest ever penalty under the FCPA.
AP7 filed a 200-page complaint on October 2019 alleging that Goldman and its former executives, including Chief Executive Officer Lloyd Blankfein and President Gary Cohn, violated Section 10(b) of the Securities Exchange Act by making false and misleading statements about Goldman’s role in the 1MDB fraud. When media reports began to surface about the collapse of 1MDB, Goldman denied any involvement in the criminal scheme. Simultaneously, Goldman misrepresented its risk controls and continued to falsely tout the robustness of its compliance measures. Defendants’ motion to dismiss is currently pending before U.S. District Judge Vernon S. Broderick.