Goldman Sachs has agreed to pay US$500 million to settle a class action lawsuit that accused the bank of defrauding shareholders over its role in the 1Malaysia Development Berhad (1MDB) scandal. The settlement was disclosed on May 21, 2026, in a filing at Manhattan federal court by lawyers representing shareholders led by Swedish pension fund Sjunde AP-Fonden [1, 2, 3, 4, 5, 6, 7].
The lawsuit alleged that Goldman Sachs lied about its involvement and risk management when it helped 1MDB issue US$6.5 billion in bonds, from which Goldman earned approximately US$600 million in fees. Shareholders claimed the bank actively facilitated and profited from fraud, leading to a drop in Goldman Sachs’ share price once the scheme was revealed [1, 2, 3, 4, 5, 6, 7].
US and Malaysian authorities stated about US$4.5 billion was siphoned from 1MDB into offshore accounts and shell companies linked to fugitive financier Jho Low [1, 2, 3, 4, 5, 6, 7].
Goldman Sachs faced earlier legal troubles related to 1MDB. In 2020, the bank agreed to pay US$2.9 billion in penalties and had its Malaysian unit admit criminal wrongdoing to settle investigations by the US Department of Justice and other authorities [1, 2, 3, 4, 6, 7]. A Brooklyn federal judge formally ended the related criminal case in May 2024 after a three-year deferred prosecution agreement was completed [1, 2, 3, 4, 6].
Two Goldman Sachs bankers were convicted or pleaded guilty to charges linked to looting 1MDB funds [1, 2, 3, 4, 5, 6].
Plaintiffs’ lawyers described the settlement as “an outstanding result for the class,” with one statement in Chinese saying, "这项和解对于整个集体来说，是一个极其出色的结果" [1, 5].
The shareholder lawsuit had been agreed to in principle in April 2026, but the settlement amount remained undisclosed until the May court filing [1, 2, 3, 5, 7].
The next step includes final court approval of the $500 million settlement, expected to conclude the shareholder claims regarding Goldman Sachs’ involvement in the 1MDB bond deal.
