Wall Street investment bank Goldman Sachs has agreed to pay $US2.9 billion ($4.1 billion) over its role in Malaysia’s 1MDB corruption scandal while US stocks have increased despite little signs of progress in stimulus negotiations.
- US authorities say the settlement reflects the banks role in a “global scheme to loot billions of dollars”
- The Dow Jones was up 0.5 per cent to 28,364, while the S&P 500 rose 0.5 per cent to 3,453
- The Australian dollar remains steady at 71.2 US cents
The settlement with the US Department of Justice and other US and overseas regulators resolved an investigation into the role played by Goldman in helping to steal cash from the Malaysian state fund.
The bank underwrote three bond offerings in 2012 and 2013 that raised $US6.5 billion for Malaysia’s government.
The US Department of Justice said the deal was the largest penalty ever levied on a US company for breaching the Foreign Corrupt Practices Act and involved an unprecedented number of regulators across the globe.
Acting head of the Justice Department’s criminal division Brian Rabbitt said the settlement reflected the bank’s central role “in a massive global scheme to loot billions of dollars”.
Prosecutors said that between around 2009 and 2014, Goldman paid more than $US1.6 billion in bribes to foreign officials in Malaysia and Abu Dhabi to win 1MDB business.
The move follows a $US3.9 billion settlement the bank reached with Malaysia in July to settle all charges against the bank related to the matter.
The scandal relates to the government of former Malaysian prime minister Najib Razak, which set up the 1MDB fund in 2009.
The Justice Department estimated $US4.5 billion was misappropriated by fund officials and their associates between 2009 and 2014 to pay for real estate, art and other luxury items.
Goldman Sachs shares rose 1.2 per cent to $US205.40.
Wall Street cautious over hopes for more stimulus spending
US stocks have gained in another day of volatile trade on optimism that new coronavirus assistance would be approved by Congress.
US House Speaker Nancy Pelosi said there had been progress in talks with the Trump administration for another round of financial aid and said legislation could be “hammered out” soon.
Ms Pelosi and US Treasury Secretary Steven Mnuchin have been in discussions on a $US2 trillion economic rescue package but Senate Republicans oppose such a large bill.
However, uncertainty remained after US President Donald Trump yesterday accused the Democrats of being unwilling to compromise.
And Senate Appropriations Committee chairman Richard Shelby told reporters that he thought the negotiations were “not going anywhere.”
As coronavirus assistance runs out, the number of Americans filing new claims for unemployment benefits dropped 55,000 to 787,000 last week, which was better than forecast by economists.
The figure is still high with the labour market recovery apparently stalling, although new claims are far lower than the record 6.9 million applications filed in March.
Continuing unemployment claims fell from 9.4 million to nearly 8.4 million last week.
Other data showed that home sales had jumped 9.4 per cent to a 14-week high.
The Dow Jones index rose 0.5 per cent to 28,367, the S&P 500 index added 0.5 per cent to 3,453, and the Nasdaq Composite increased by 0.2 per cent to 11,506.
Oil stocks and banks boosted the S&P 500.
Electric car sales boost Tesla
Electric car maker Tesla jumped after it reported its fifth quarterly profit in a row.
It made a revenue record of $US8.8 billion, boosted by a rise in vehicle deliveries and sales of environmental regulatory credits to other carmakers.
Tesla said it was on target to deliver half a million vehicles by the end of this year.
That goal will require it to significantly increase car sales over the fourth quarter.
Tesla shares rose 0.7 per cent to $US425.79.
European stocks recover ground after UK stimulus
New stimulus measures in the UK saw European stocks come off their lows.
The UK Finance Minister Rishi Sunak announced billions of pounds in financial aid for pandemic hit firms.
However rising coronavirus cases worried investors with Spain becoming the first Western European nation to surpass 1 million infections.
The FT100 index rose 0.2 per cent to 5,786, the DAX in Germany fell 0.1 per cent to 12,543 and the CAC 40 in Paris was little change, down 3 points to 4,851.
The Australian share market is expected to open flat today with the ASX SPI 200 futures index up 1 point to 6,170.
The ASX 200 fell 0.3 per cent yesterday, coming off steep falls earlier in the day.
The Australian dollar is little changed at around 71.2 US cents.
Spot gold fell 1.1 per cent to $US1904 an ounce
Brent crude oil rose 1.9 per cent to $US42.50 a barrel.