by Sarah N Lynch and Noor Zainab Hussain at Reuters
Goldman Sachs Group Inc on Thursday said it was clawing back $174 million in executive compensation and had agreed to pay $2.9 billion over its role in Malaysia’s 1MDB corruption scandal, lifting a cloud that has hung over the bank for years.
The settlement with the U.S. Department of Justice and other U.S. and overseas regulators resolves a probe into the role Goldman Sachs bankers played in helping to steal cash, which Goldman helped raise, from the Malaysian state fund.
While the scandal has proved a humbling and costly saga for the Wall Street giant, the long-awaited settlement should allow Chief Executive David Solomon to accelerate his plans to turn the bank around after a decade of under-performance, analysts said. Goldman’s shares were up 1.4% on the news.
“Getting this overhang off the back of management and the company in general is a very big win,” said Marty Mosby, an analyst at boutique brokerage Vining Sparks.
Under terms of the deal, Goldman agreed to pay a $2.3 billion fine for breaking anti-bribery laws and to disgorge $600 million of ill-gotten gains as part of a deferred prosecution agreement, which also requires it to improve its compliance controls.
The bank also agreed for its Malaysia subsidiary to…