Marlon Bundo II, FT
Since the end of June, Goldman Sachs has shuffled executives in its investment banking group and cut hundreds of jobs as it attempts to right the ship.
Now Goldman Sachs is also faced with a new headache: a federal probe into whether the firm may have violated securities laws in connection with the alleged $6 billion fraud at Malaysian sovereign wealth fund 1MDB.
The Securities and Exchange Commission, which the Wall Street Journal reported on Friday, was planning to ask Goldman about what it knew about $6 billion in securities tied to 1MDB and whether Goldman misled investors in arranging a series of deals with the fund.
The SEC probe is the first that the SEC has opened since Special Counsel Robert Mueller launched his criminal investigation into what happened at 1MDB, according to a person with knowledge of the matter. The source asked not to be identified because he was not authorized to talk publicly about the matter.
Congressman Elijah Cummings, the ranking Democrat on the House Oversight and Government Reform Committee, sent a letter on Friday to Michael Horowitz, the director of the SEC, asking for a formal investigation into Goldman Sachs’ actions in connection with 1MDB.
A Goldman Sachs spokesman referred questions to a spokesman for the SEC. The SEC declined to comment.
Here is the letter from Cummings:
Investors have soured on the investment bank’s more than $9 billion in holdings in private equity and hedge funds, sending the firm’s stock price down sharply, and forcing executives to announce hundreds of layoffs this year.
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