Hong Kong's markets watchdog on Thursday fined Goldman Sachs's Asian business $350 million for its role in Malaysia's 1MDB scandal, the largest single fine ever levied by the regulator in the Asian financial hub.
The Securities and Futures Commission (SFC) said serious lapses and deficiencies in management controls at Goldman Sachs (Asia) L.L.C. had contributed to the misappropriation of $2.6 billion from funds raised by 1Malaysia Development Berhad (1MDB) in three bond offerings in 2012 and 2013.
A Goldman Sachs spokesman said that the Wall Street bank would issue a statement in due course.
The three bond offerings, which raised a combined $6.5 billion, were arranged and underwritten by UK-based Goldman Sachs International, with work conducted by deal team members in multiple jurisdictions, who shared the revenue generated.
The SFC said Goldman Sachs Asia, the Hong Kong-based compliance and control hub of Goldman Sachs in Asia, had significant involvement in the origination, approval, execution and sales process of the three bond offerings.
The bank's Asia unit had earned $210 million from the offerings, the largest share among the various Goldman Sachs entities.
"Goldman Sachs Asia fell far short of the standards expected of a licensed intermediary in the 1MDB case and suffered not only reputational damage from its own failures, but also brought the securities industry into disrepute,” said Thomas Atkinson, the SFC’s Executive Director of Enforcement in the statement.