Goldman Sachs CEO apologizes to Malaysia after scandal, shares surge on earnings

By FinancialsFOXBusiness

Goldman Sachs CEO David Solomon addresses 1MDB scandal, business model on earnings call

FBN’s Charlie Gasparino discusses how Goldman Sachs CEO David Solomon addressed the 1MDB scandal and the problems with the company’s business model during an earnings call on Wednesday.

Goldman Sachs CEO David Solomon apologized to the Malaysian people on Wednesday for a former employee’s participation in an embezzlement scheme involving the country’s sovereign development fund, 1MDB.

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The Malaysian government is seeking $7.5 billion in compensation from Goldman Sachs, alleging that the bank helped 1MDB to raise billions of dollars that was later funneled to corrupt individuals. Goldman Sachs faces both criminal and civil charges in connection with the case, though the bank has denied wrongdoing. Two Goldman Sachs bankers, including Tim Leissner, have also been charged.

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“It's very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government,” Solomon said during the bank’s earnings call. “Tim Leissner was a partner at our firm, by his own admission, was one of those people. For Leissner's role in that fraud, we apologize to the Malaysian people.”

TickerSecurityLastChange%Chg
GSGOLDMAN SACHS GROUP INC.213.92-3.30-1.52%

Goldman Sachs shares rose more than 9 percent in trading Wednesday as the bank easily beat expectations for quarterly profit. It was the stock's largest single-day percentage increase since March 23, 2009.

Solomon’s appearance on the call was a rare development for the bank, which is attempting to reassure investors about the health of its business amid the 1MDB scandal. FOX Business Senior Correspondent Charlie Gasparino was first to report that Solomon would be on the call.

The company’s stock had declined more than 30 percent over the last year amid disappointing financial performance. Gasparino reported that some Goldman Sachs executives project that the bank will incur between $5 billion and $10 billion in costs related to settlements tied to the 1MDB scandal.

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“This has been a difficult time, but I'm proud of how our firm has remained focused on our clients. … Please appreciate that I've tried to be as forthcoming as possible on my comments on 1MDB,” Solomon added.

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