⚠ 1MDB: Settled, Not FinishedLow threat

Goldman Sachs (GS) — threat to the moat

Goldman paid more than $2.9 billion for 1MDB in 2020, and Malaysia still wants about a billion more.

The worst scandal in Goldman's modern history is settled in the courts that matter most and still open in two others. Between 2012 and 2013 its subsidiaries acted as arrangers or purchasers of about $6.5 billion of debt securities for 1MDB, a Malaysian state investment fund1. On 1 November 2018 the Department of Justice unsealed a criminal information, and on 22 October 2020 Goldman settled with the Department of Justice, the SEC, the Federal Reserve and regulators in New York, the United Kingdom, Singapore and Hong Kong2.

1MDB: from bonds to open claims2012-2013about $6.5bnof 1MDB debtarranged22 Oct 2020settlements,more than $2.9bnMay 2024parent chargedismissedAug 2025Malaysiademandsabout $1bnSep 2025class actioncertified in partGoldman Sachs Form 10-K FY2025; SEC press release 2020-265
Six years after the settlement, two matters remain.

The SEC said Goldman "agreed to pay more than $2.9 billion", including $606.3 million in disgorgement and a $400 million civil penalty to settle its own charges3. Goldman's Malaysian subsidiary pleaded guilty and was sentenced in June 2021; the charge against the parent under its deferred prosecution agreement was dismissed in May 20244. Net provisions for litigation and regulatory proceedings were $3.42 billion in 2020 against $1.24 billion in 20195.

Two matters remain. Goldman and Malaysia have been in arbitration since October 2023 over the 2020 settlement, which included a guarantee that Malaysia would recover at least $1.4 billion of assets; in August 2025 Malaysia demanded "a final payment of approximately $ 1 billion", which Goldman says is not owed because recoveries exceeded $1.4 billion6. And a securities class action filed in December 2018 was certified in part in September 20257.

The firm's own risk factor names the lasting cost: "Any such resolution of a criminal matter involving us or our employees could lead to increased exposure to civil litigation"8.

The SEC's order described the conduct plainly: beginning in 2012, former senior employees of Goldman Sachs used a third-party intermediary to bribe high-ranking officials in Malaysia and Abu Dhabi9. The order found violations of the anti-bribery, internal accounting controls, and books and records provisions10. In August 2025 the firm applied to the Department of Labor to extend, through June 2031, the exemption that lets it keep its status as a qualified professional asset manager11.

The SEC said the bribes enabled Goldman to win lucrative business from 1MDB, including underwriting approximately $6.5 billion in bond offerings12. Goldman has since paid more than $2.9 billion in the coordinated resolutions13.

Provisions for litigation were $215 million in 2025 and a credit of $28 million in the second quarter of 20261415. A quarter above $500 million would mean one of the open matters had turned against the firm.

The number that tests this threat
Reported
Net provisions for litigation and regulatory proceedings, latest quarter
$(28)M credit (Q2 2026) vs $215M for 2025

The cost of open legal matters including 1MDB; a quarter above $500M would mean one had turned against the firm.

Source: Goldman Sachs Q2 2026 earnings results ↗
References
  1. ReportedBetween 2012 and 2013 its subsidiaries acted as arrangers or purchasers of about $6.5 billion of debt securities for 1MDB, a Malaysian state investment fund.
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  2. ReportedOn 1 November 2018 the Department of Justice unsealed a criminal information, and on 22 October 2020 Goldman settled with the Department of Justice, the SEC, the Federal Reserve and regulators in New York, the United Kingdom, Singapore and Hong Kong.
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  3. ReportedThe SEC said Goldman "agreed to pay more than $2.9 billion", including $606.3 million in disgorgement and a $400 million civil penalty to settle its own charges.
    SEC press release 2020-265 - Goldman Sachs to pay more than $2.9 billion in coordinated 1MDB resolutions, including more than $1 billion to settle the SEC charges, $606.3 million of disgorgement and a $400 million civil penalty. — October 2020 · publ. 22 October 2020 · source ↗
  4. ReportedGoldman's Malaysian subsidiary pleaded guilty and was sentenced in June 2021; the charge against the parent under its deferred prosecution agreement was dismissed in May 2024.
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  5. ReportedNet provisions for litigation and regulatory proceedings were $3.42 billion in 2020 against $1.24 billion in 2019.
    Goldman Sachs Form 10-K for fiscal 2020 - net provisions for litigation and regulatory proceedings of $3.42 billion in 2020 against $1.24 billion in 2019. — FY2020 · publ. February 2021 · source ↗
  6. ReportedGoldman and Malaysia have been in arbitration since October 2023 over the 2020 settlement, which included a guarantee that Malaysia would recover at least $1.4 billion of assets; in August 2025 Malaysia demanded "a final payment of approximately $ 1 billion", which Goldman says is not owed because recoveries exceeded $1.4 billion.
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  7. ReportedAnd a securities class action filed in December 2018 was certified in part in September 2025.
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  8. ReportedThe firm's own risk factor names the lasting cost: "Any such resolution of a criminal matter involving us or our employees could lead to increased exposure to civil litigation".
    Goldman Sachs Form 10-K for fiscal 2025 - Item 1A risk factors and Note 27 legal proceedings, including the 1MDB matters. — FY2025 · publ. 25 February 2026 · source ↗
  9. ReportedThe SEC's order described the conduct plainly: beginning in 2012, former senior employees of Goldman Sachs used a third-party intermediary to bribe high-ranking officials in Malaysia and Abu Dhabi.
    SEC press release 2020-265 - Goldman Sachs to pay more than $2.9 billion in coordinated 1MDB resolutions, including more than $1 billion to settle the SEC charges, $606.3 million of disgorgement and a $400 million civil penalty. — October 2020 · publ. 22 October 2020 · source ↗
  10. ReportedThe order found violations of the anti-bribery, internal accounting controls, and books and records provisions.
    SEC press release 2020-265 - Goldman Sachs to pay more than $2.9 billion in coordinated 1MDB resolutions, including more than $1 billion to settle the SEC charges, $606.3 million of disgorgement and a $400 million civil penalty. — October 2020 · publ. 22 October 2020 · source ↗
  11. ReportedIn August 2025 the firm applied to the Department of Labor to extend, through June 2031, the exemption that lets it keep its status as a qualified professional asset manager.
    Goldman Sachs Form 10-K for fiscal 2025 - consolidated results of operations and financial statements. — FY2025 · publ. 25 February 2026 · source ↗
  12. ReportedThe SEC said the bribes enabled Goldman to win lucrative business from 1MDB, including underwriting approximately $6.5 billion in bond offerings.
    SEC press release 2020-265 - Goldman Sachs to pay more than $2.9 billion in coordinated 1MDB resolutions, including more than $1 billion to settle the SEC charges, $606.3 million of disgorgement and a $400 million civil penalty. — October 2020 · publ. 22 October 2020 · source ↗
  13. ReportedGoldman has since paid more than $2.9 billion in the coordinated resolutions.
    SEC press release 2020-265 - Goldman Sachs to pay more than $2.9 billion in coordinated 1MDB resolutions, including more than $1 billion to settle the SEC charges, $606.3 million of disgorgement and a $400 million civil penalty. — October 2020 · publ. 22 October 2020 · source ↗
  14. ReportedProvisions for litigation were $215 million in 2025 and a credit of $28 million in the second quarter of 2026.
    Goldman Sachs full-year and fourth-quarter 2025 earnings results, Form 8-K exhibit 99.1 - net revenues by region, net interest income, deposits, loans, AUS rollforward, capital returned and Apple Card effects. — FY2025 · publ. 15 January 2026 · source ↗
  15. ReportedProvisions for litigation were $215 million in 2025 and a credit of $28 million in the second quarter of 2026.
    Goldman Sachs second-quarter 2026 earnings results, Form 8-K exhibit 99.1 - segment and line revenues for the quarter and half, earnings, balance sheet, capital, VaR, assets under supervision and the dividend increase - balance sheet, capital, risk, provisions, headcount and capital returned. — Q2 2026 · publ. 14 July 2026 · source ↗
Sources
Generated September 28, 2026