Goldman Sachs to recoup top executives' pay after costly 1MDB fines

The Wall Street firm will recoup money from CEO David Solomon, his predecessor Lloyd Blankfein, and other current and former executives, people familiar with the matter said

Goldman Sachs Group Inc. is seizing tens of millions of dollars from top executives after agreeing to a costly settlement to resolve multiple government investigations into its role in a Malaysian bribery scandal.

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The Wall Street firm will recoup money from Chief Executive David Solomon, his predecessor Lloyd Blankfein, and other current and former executives, people familiar with the matter said, as it prepares to admit to compliance lapses in its dealings with a corrupt Malaysian investment fund, known as 1MDB.

Goldman has agreed to pay about $2.8 billion to the U.S. Justice Department and other global regulators to settle 1MDB allegations, The Wall Street Journal reported Tuesday. That is on top of the $2.5 billion it agreed in July to pay the government of Malaysia. The penalties amount to about eight months of profits for the Wall Street firm.

In Brooklyn federal court on Thursday, a Goldman subsidiary in Malaysia said it would plead guilty to conspiring to violate U.S. antibribery laws. The bank is expected later Thursday to finalize its settlement with the Justice Department and regulators in the U.K., Singapore and New York state.

The financial moves -- a combination of clawbacks for departed executives and pay cuts for current ones -- are a concession to shareholders who will shoulder the financial cost of the scandal and employees whose own bonuses this year are likely to shrink because of it.

They also are an admission of sorts that the crux of the government's case against Goldman, that it failed to properly oversee its senior bankers and fostered a win-at-all-cost culture, has some merit. The exact amount at stake couldn't be learned.

In 2012 and 2013, Goldman helped raise $6.5 billion for 1MDB by selling bonds to investors. Prosecutors say much of that money was stolen by an adviser to the fund named Jho Low, aided by two Goldman bankers and associates in the Malaysian and Emirati governments.

Goldman had long portrayed the bankers -- Timothy Leissner, who has pleaded guilty, and Roger Ng, who has maintained his innocence -- as rogue employees who hid their activities and Mr. Low's involvement in the deals from their bosses. Mr. Low has denied the allegations against him.