Goldman Sachs reaches tentative deal to settle 1MDB shareholder lawsuit

Goldman Sachs reached an agreement in principle to settle a shareholder class action over its work on 1Malaysia Development Berhad, a sign that the 1MDB scandal is still shaping the firm’s reputation long after the bond deals themselves. The tentative deal does not disclose financial terms, but it keeps alive a basic question inside and outside the bank: whether Goldman has truly closed the book on one of Wall Street’s biggest control failures, or whether the legacy of that episode will keep shadowing its culture, compliance burden and leadership bench.

The lawsuit, brought by shareholders led by Sweden’s Sjunde AP-Fonden, has been pending since 2018 under the caption Sjunde AP-Fonden v. The Goldman Sachs Group, Inc. A U.S. District Court in the Southern District of New York certified the shareholder class in September 2025, raising the pressure on Goldman before the sides said they would seek preliminary court approval by May 20. Goldman declined to comment. Lawyers for the shareholder group did not immediately respond.

For Goldman employees, the significance goes beyond one more legal filing. The 1MDB affair has already forced the firm to absorb massive penalties, internal scrutiny and years of reputational drag. U.S. and Malaysian authorities have said about $4.5 billion was siphoned from the fund. Goldman helped 1MDB sell $6.5 billion of bonds and earned hundreds of millions of dollars in fees, then in October 2020 Goldman and Goldman Sachs (Malaysia) admitted to conspiring to violate the Foreign Corrupt Practices Act in connection with a scheme to pay more than $1 billion in bribes to officials in Malaysia and Abu Dhabi.

That global resolution topped more than $2.9 billion in penalties, fines and disgorgement, a reminder that the cost of one flawed client relationship can outlast multiple bonus cycles and leadership eras. The U.S. criminal case over 1MDB was formally ended in May 2024 after Goldman completed its deferred prosecution agreement, but the case still produced convictions and guilty pleas. One former Goldman banker was convicted and another pleaded guilty in connection with the scandal.

Malaysia’s continued asset-recovery efforts have kept the matter politically alive there, too, which is part of why even a shareholder settlement still resonates. For Goldman, every new settlement is another signal that the 1MDB episode is not just a legal chapter to close. It is a governance scar that continues to shape how the firm is judged by investors, employees and the next generation of leaders deciding whether Wall Street’s biggest name is worth building a career around.