JPMorgan Chase to pay Malaysia $330M to settle 1MDB case

[1MDB alphabet letter on wooden background]

JPMorgan Chase (NYSE:JPM [https://seekingalpha.com/symbol/JPM]) agreed to pay Malaysia 1.4B ringgit ($330M) to settle all claims relating to 1MDB, the sovereign wealth fund that was the focus of one of the world's largest financial frauds, the government of Malaysia said Friday.

The settlement will end the U.S. lender's exposure to the scandal that came to light in 2015. In 2020, Goldman Sachs (GS [https://seekingalpha.com/symbol/GS]) reached a $3.9B settlement [https://seekingalpha.com/news/3594682-goldman-sachs-reaches-3_9b-settlement-over-1mdb-scandal]with Malaysia to resolve claims that it misled investors in bond sales that raised $6.5B for the fund. The U.S. Department of Justice has determined that $4.5B was misappropriated from 1MDB.

Also on Friday, Switzerland's Attorney General fined [https://www.news.admin.ch/it/newnsb/iBaPoJlflbgYucklcjfxd]the JPMorgan Chase (NYSE:JPM [https://seekingalpha.com/symbol/JPM]) CHF 3M ($3.7M) for "failing to take all reasonable and necessary organizational measures" to prevent money laundering of the funds misappropriated from 1MDB.

In 2021, 1MDB sued units of JPMorgan Chase (NYSE:JPM [https://seekingalpha.com/symbol/JPM]), Deutsche Bank (DB [https://seekingalpha.com/symbol/DB]), and Coutts & Co., alleging "negligence, breach of contract, conspiracy to defraud/injure, and/or dishonest assistance," and sought to recover alleged losses.

Under the Malaysian agreement, JPMorgan (JPM [https://seekingalpha.com/symbol/JPM]) will, "without admission of liability," pay [https://www.bernama.com/en/index.php]the amount to Malaysia's Assets Recovery Trust Account.

A JPMorgan spokesman commented, "We appreciate the collaboration with the Malaysian Government in resolving past matters related to 1MDB, which have been thoroughly reviewed. Since then, we’ve enhanced our controls, earning the trust of regulators in Switzerland and beyond. We are pleased to have these matters resolved and remain focused on delivering exceptional service to our clients."

Billions of dollars were funneled out of 1MDB starting in 2009, until the scandal was reported in 2015.

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