The Goldman Sachs Group (GS:NYE) has escalated its ongoing legal battle with the Malaysian government by filing a lawsuit in the London Court of International Arbitration. The dispute revolves around the 1Malaysia Development Bhd (1MDB) scandal, which has cast a long shadow on the financial world. This article will examine the history of the 1MDB fund, and the current disagreement between both parties and provide insights into the GS stock forecast.
Misappropriation of Billions and Goldman Sachs’ Role:
1MDB was conceived as a sovereign fund in 2009 with the noble aim of driving economic development in Malaysia. It successfully raised billions of dollars through bonds for various investment projects and joint ventures during the period from 2009 to 2013.
However, the scandalous twist to this story emerged in 2015 when the U.S. Department of Justice revealed that approximately $4.5 billion had been siphoned off to offshore bank accounts and shell companies, many of which had connections to Malaysian financier Jho Low. Goldman Sachs found itself in the crosshairs as it was implicated in arranging the bond deals and earning a staggering $600 million in fees.
Disagreement Between the Parties:
The dispute escalated as Goldman Sachs reached a critical point, agreeing to a hefty $3.9 billion settlement. They also committed to a one-time interim payment of $250 million if Malaysia didn’t receive $500 million in assets by August 2022.
The contention lies in whether Malaysia received the stipulated minimum amount or if the interim payment was due. To seek resolution, Goldman Sachs initiated arbitration proceedings with the London Court of International Arbitration.
Cautious Q3 Expectations:
While this legal battle unfolds, investors are keen to understand the outlook for Goldman Sachs’ stock. As the company gears up for its Q3 earnings release slated for October 17, JMP Securities analyst Devin Ryan paints a cautious picture, anticipating lackluster Q3 results. Ryan has adjusted the price target from $450 to $440, maintaining a market-outperform rating on the stock.
GS stock forecast:
According to the GS stock forecast from 17 analysts, the average target price is $402.81. Notably, the average rating remains positive with a buy sentiment. However, Stock Target Advisor’s analysts have a bearish outlook. This judgment is based on two positive signals and six negative signals.
Stock Outlook:
At the last closing, the stock price was $313.02. This price has changed by +1.43% over the past week, -3.58% over the past month, and +6.39% over the last year.
Conclusion:
The legal confrontation between Goldman Sachs and the Malaysian government over the 1MDB scandal persists, leaving many questions unanswered. As investors eagerly await the release of the third-quarter earnings report, analysts maintain mixed sentiments about the stock’s performance. With significant financial stakes and an impending arbitration process, the future remains uncertain for both parties involved in this high-profile case.
