The Goldman Sachs Group Inc. (GS)’s stock hit a 52-week high last week, reaching $232.19. It’s now less than 18% from the all-time high of $273.38 it registered in March 2018.
When a stock’s making new highs, it’s usually a reflection that the underlying company’s doing well.
But not Goldman Sachs.
Its stock’s going up; despite it being bad (as in a bad actor, bad as in criminal).
That’s right. Goldman Sachs is once again facing a criminal investigation and potentially massive fines.
The story is complicated, salacious, and fantastic – as in you can’t believe this actually happened and it’s bound to be a hit movie soon.
In a nutshell, Goldman Sachs helped raise $6.5 billion for what was supposed to be a kind-of, sort-of Malaysian sovereign wealth fund.
It now looks like a total scam that Goldman bankers helped set up and bilked from the get-go.
The “fund,” known as 1MDB (which stands for 1Malaysia Development Bhd.), was established by a Malaysian government adviser in conjunction with top Malaysian government officials.
It invested in shady deals that served insiders, but for all intents and purposes, it looked like it was serving the Malaysian economy by helping build infrastructure.
None of that was true.
The bottom line is Goldman Sachs ripped $600 million in fees out of the money it raised, an unusually large takedown for an investment bank.
And a handful of its bankers ripped off the fund in criminal fashion.
Jho Low, the Malaysian government adviser, reputedly stole billions from the fund. He forfeited more than $700 million in assets he’d parked in the U.S., where U.S. authorities could get their hands on them based on the on-going criminal investigation being conducted by the Justice Department.
Low hasn’t admitted any wrongdoing. But he is a fugitive, wanted in the U.S. for questioning and possible arrest.
Tim Leissner, the top Goldman banker in Asia responsible for shepherding 1MDB’s money-raising efforts and apparently its criminal scheming, pled guilty to stealing $200 million from the fund.
He’s been kicked out of Goldman (duh!). And faces sentencing early next year.
Like I said, it’s a fantastic story and the details are the stuff of legend and movie stardom.
But, we’re not there yet, meaning the whole story isn’t out.
For now, it looks like Goldman’s Asia subsidiary may plead guilty to criminal charges and have to pay a $2 billion fine. But, like I said, we’re not there yet. Negotiations are ongoing.
Whatever happens with the Justice Department and Goldman, Malaysian authorities are pursuing criminal charges against Goldman, not just its subsidiary. That could mean billions in restitution and fines.
In the meantime, Goldman’s stock is headed higher.
Maybe it’s just the holidays and investors don’t care who’s been naughty, only how nice it would be if Goldman bobs and weaves its way out of another criminal matter like it has so many times in the past.
Have a Merry Christmas tomorrow, rest up, and I’ll be back with you on Friday.