Goldman Sachs shares slumped the most in two years after Malaysia's finance minister demanded a full refund of fees it paid the bank tied to a doomed investment fund.
The company declined 6.1 percent at 11:43 am in New York trading, leading shares of financial firms lower amid a broad decline in equities.
Goldman has attracted scrutiny for its role in helping set up the Malaysian state investment fund known as 1MDB. The bank arranged three bond deals in 2012 and 2013 to fund 1MDB, raising $6.5 billion to supposedly attract foreign investment. Instead, U.S. authorities accused a Malaysian financier of stealing billions of dollars from the fund and using some of that money to pay hundreds of million of dollars in bribes.
While a Goldman investment banker named Tim Leissner has plead guilty to participating in the scheme, the bank has said that Leissner and others deceived the firm and dodged its internal controls. In his guilty plea, Leissner said that his actions to hide facts from Goldman's compliance staff were part of the bank's culture.
Now, Malaysian Finance Minister Lim Guan Eng said the country is seeking a full refund of the $600 million in fees Goldman was paid for the bond deals, according to a Bloomberg news report based on a radio interview.
Goldman also faces "significant fines" from a U.S. Department of Justice investigation into its role in the 1MDB scandal.
