A U.S. grand jury is investigating whether employees at Goldman Sachs Inc. misled bondholders concerning securities issued by the brokerage firm that were Malaysian government funds. Employees at Goldman Sachs may have had reason to believe that some of the proceeds from bond deals done for the fund, were actually being used for purposes other than their intended. Federal authorities are also exploring whether Goldman’s hiring practices violated U.S. anticorruption laws. Goldman’s top former banker in Southeast Asia, Tim Leissner, was suspended for allegedly violating firm policies. Leissner left the firm last month. While employed there, Leissner allegedly advised the fund on three acquisitions and arranged the sale of three bonds valued at a total of $6.5 billion that brought in $650 million for the firm. 1MDB officials allegedly directed Goldman to wire proceeds from the deal to the fund’s account at a small, Swiss private bank. This is an unusual proceeding, as private banks don’t typically receive transfers of that size. Goldman then underwrote the offering, buying $3 billion up front at a slight discount. Goldman made nearly $300 million in fees from the bond sale. It was meant to fund the construction of a new financial center in Kuala Lumpur to be named after the father of the Malaysian Prime Minister. 1MDB allegedly moved half of the money into overseas mutual funds and the remainder for paying down debt and for working capital. If you invested in 1MDB, please call our Chicago-based securities law offices for a free consultation with an attorney to discuss your options of suing Goldman Sachs for losses in the arbitration forum on a contingency fee basis.
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