Goldman Sachs cuts quarterly earnings citing legal provisions By Reuters

© Reuters. FILE PHOTO: The Goldman Sachs logo is displayed on a post above the floor of the New York Stock Exchange

By Elizabeth Dilts Marshall

NEW YORK (Reuters) – Goldman Sachs Group Inc (NYSE:) on Friday lowered its previously stated quarterly earnings as the bank set aside more money to pay for its settlement with the Malaysian government over the multi-billion 1MDB scandal.

Goldman Sachs Group Inc lowered its net earnings applicable to common shareholders to $197 million from $2.25 billion, in a filing published on Friday.

The revised earnings reflect a larger-than-previously-announced provision for legal and regulatory costs due to a $3.9-billion settlement the bank reached with the Malaysia government.

The bank said it set aside $2.96 billion in the second quarter for potential legal and regulatory costs, up from the $945-million Goldman said it set aside on July 15 during its second quarter earnings announcement.

The bank’s stock was down 0.1% in pre-market trading.

On July 24, Goldman agreed to pay the Malaysian government $2.5 billion cash and return at least $1.4 billion in proceeds from assets linked to sovereign wealth fund 1Malaysia Development Bhd (1MDB), in exchange for Malaysia dropping all criminal charges against the bank.

U.S. and Malaysian authorities estimate $4.5 billion was stolen from the fund between 2009 and 2014. Goldman helped the fund raise $6.5 billion in two bond offerings, earning itself $600 million in fees, according to the U.S. Justice Department.

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