Goldman Sachs controversies

Goldman Sachs

Company type	Public
Industry	Investment banking, Financial services
Founded	1869 (1869)
Founder	Marcus Goldman
Headquarters	New York City , United States
Key people	Lloyd Blankfein (former CEO), David Viniar (former CFO)
Products	Investment banking, securities, investment management, other financial services

Goldman Sachs, a prominent investment bank, has been the subject of various controversies, including allegations concerning its ethical conduct, collaborations with authoritarian governments, and its close connections to the U.S. federal administration through a persistent "revolving door" of former personnel. The institution has also faced accusations of manipulating commodity prices by engaging in futures speculation. Within the company, criticism has arisen over expectations for first-year analysts to work up to 100 hours weekly, widespread employee dissatisfaction, harsh management approaches, inadequate mental health resources, and high-pressure work conditions leading to physical strain.

Involvement in the 2008 financial crisis

Amid the 2008 financial crisis, Goldman Sachs was scrutinized for purportedly deceiving investors and benefiting financially from the collapse of the mortgage market. This led to investigations conducted by the United States Congress, the United States Department of Justice, and a lawsuit initiated by the U.S. Securities and Exchange Commission, culminating in a $550 million settlement reached in July 2010. The firm denied any misconduct, maintaining that its clients were informed about its positions betting against mortgage-related securities, which were primarily used as hedges against losses.

Journalists Bethany McLean and Joe Nocera noted that Goldman Sachs was "vilified by both media and public," despite its focus away from retail clients that usually kept it out of public view. In a July 2009 article published in Rolling Stone, Matt Taibbi described Goldman as a "great vampire squid," accusing it of orchestrating significant market manipulations dating back to the Great Depression.

Although all investment banks underwent congressional examination, Goldman was uniquely singled out for an exclusive hearing by the Senate Permanent Subcommittee on Investigations and was subject to a critical report. In 2011, a Senate committee charged Goldman Sachs with misleading clients and harboring conflicts of interest. The 635-page document titled Wall Street and the Financial Crisis: Anatomy of a Financial Collapse claimed that Goldman profited at the expense of investors during the mortgage market downturn.

The Subcommittee forwarded this report to the United States Department Of Justice for evaluation of potential legal breaches. Following this, Manhattan’s district attorney issued subpoenas to Goldman seeking information related to possible securities fraud. Nevertheless, on August 9, 2012, the Justice Department declared it would not pursue charges against Goldman Sachs or its employees concerning trades executed during the crisis.

Employee bonuses awarded in 2009 despite economic turmoil

In June 2009, after repaying funds received through the Treasury’s TARP program, Goldman Sachs distributed an unprecedented $11.4 billion in bonuses, reflecting robust financial results. Among these payouts were bonuses exceeding $1 million awarded to 953 employees, which attracted criticism from Andrew Cuomo, who was then serving as New York Attorney General. Despite this backlash, CEO Lloyd Blankfein along with six top executives opted to forgo bonuses, citing accountability for the economic downturn.

Advantages from the Government Rescue of AIG

Amid the 2008 financial turmoil, American International Group (AIG) was provided with $180 billion in government-backed loans, a significant portion of which compensated counterparties involved in credit default swaps. Among the beneficiaries, Goldman Sachs received $12.9 billion through these settlements. The complete reimbursement to financial institutions, including Goldman Sachs, ignited controversy and political discourse regarding whether these entities should have borne a larger share of the losses. Experts cautioned that AIG’s collapse might have triggered a severe financial meltdown on a scale similar to the Great Depression.

Company's Reaction to Criticism Regarding AIG Payments

Goldman Sachs maintained that its net exposure to AIG was "not material," safeguarded by hedging instruments (CDSs arranged with other parties) and $7.5 billion in collateral, which protected the firm from economic harm if AIG defaulted. The expense for these hedges surpassed $100 million. Chief Financial Officer David Viniar remarked that earnings linked to AIG in early 2009 were minimal and expressed bewilderment over the intense focus on Goldman’s trading interactions with AIG.

There remains speculation about whether Goldman’s hedges would have paid off had AIG gone bankrupt. A report from the U.S. Treasury Inspector General highlighted that an AIG failure would have complicated Goldman’s ability to unwind positions and collect on credit protection, potentially exposing the firm to substantial risks related to collateralized debt obligations. Goldman contended that CDS contracts were marked to market daily, obligating counterparties to post increasing collateral as AIG’s default risk escalated, thereby effectively shielding the firm from bankruptcy repercussions.

Nonetheless, this collateral would not have entirely covered losses in a bankruptcy scenario due to incomplete collateral requirements and uncertain valuation of collateral amid AIG’s financial distress.

Potential Advantages from Participation in September 15, 2008 Meetings at the New York Federal Reserve

Although allegations suggest Goldman Sachs gained preferential access by attending pivotal meetings at the New York Fed on September 15, 2008, which determined AIG’s future, no definitive proof supports this assertion. Much of the criticism stemmed from a misinterpretation of an article in The New York Times, later corrected to clarify that CEO Lloyd Blankfein was "one of the Wall Street chief executives" present; executives from other firms were also in attendance. Goldman Sachs CFO David Viniar confirmed that Blankfein never formally "met" with US Treasury Secretary Henry Paulson regarding AIG but maintained frequent telephone communication. Paulson himself did not attend the meetings at the New York Fed.

Morgan Stanley was engaged by the Federal Reserve as an advisor for the AIG bailout. According to The New York Times, Paulson spoke with Blankfein approximately two dozen times during the bailout week after receiving an ethics waiver. While it is common for regulators to consult market participants during crises for insights, Paulson’s calls with Goldman’s CEO were notably more frequent than those with other banks. Federal officials emphasize that although Paulson played a role in rescue decisions, the Federal Reserve primarily directed the design and funding of the AIG bailout.

$60 million resolution regarding Massachusetts subprime mortgage investigation (2009)

On May 10, 2009, Goldman Sachs consented to a payment of up to $60 million to settle an inquiry initiated by the Massachusetts attorney general concerning allegations that the company endorsed unfair home loan practices. The settlement proceeds were allocated to lower mortgage expenses for 714 Massachusetts borrowers holding subprime loans financed by Goldman Sachs.

Allegations of stock price manipulation

Goldman Sachs was accused of issuing analyst reports with overstated financial forecasts for Exodus Communications, granting it the top stock rating despite awareness that such a rating was unwarranted.

On July 15, 2003, Goldman Sachs, along with Lehman Brothers and Morgan Stanley, faced litigation for artificially boosting RSL Communications’ stock valuation through deceptive analyst reports, culminating in a $3.38 million settlement.

Furthermore, Goldman Sachs was charged with soliciting illicit kickbacks from institutional investors who profited by reselling shares that Goldman had deliberately undervalued during initial public offerings amid the dot-com bubble. Lawsuit documents related to eToys.com’s 1999 IPO revealed that Goldman intentionally set IPO prices below market value to favor select clients, who reciprocated by increasing business with the firm. This scheme defrauded issuing companies and their original shareholders by suppressing stock value.

Allegations of 'naked short-selling' – Overstock.com case

In 2015, Goldman reached a $20 million settlement with Overstock over accusations of engaging in abusive tactics involving the creation of fictitious lendable shares, effectively amounting to "organized counterfeiting of shares." Crucial evidence surfaced when an attorney from Goldman inadvertently uploaded incriminating email communications to PACER, the federal court’s electronic filing system.

Offshore tax haven utilization

A 2016 analysis by Public Interest Research Group disclosed that Goldman Sachs maintained 987 subsidiaries located in offshore tax havens, including 537 entities registered in the Cayman Islands, despite lacking genuine physical offices there. Official records showed Goldman held $28.6 billion offshore. In 2008, the firm’s effective tax rate plummeted to 3.8% from 34% the year prior, with tax payments decreasing from $6 billion in 2007 to $14 million, primarily due to shifting profits to low or no-tax jurisdictions such as the Cayman Islands.

Participation in the European sovereign debt crisis

Goldman Sachs attracted scrutiny for its involvement in the 2010 European debt crisis. In 2001, it arranged a €2.8 billion covert loan for Greece structured as an off-balance-sheet "cross-currency swap," concealing approximately 2% of Greece’s national debt and generating a €600 million fee. By 2009, Goldman helped establish a specialized credit default swap (CDS) index targeting Greece’s high-risk debt, which contributed to escalating bond yields and ultimately pushed Greece toward insolvency between 2010 and 2011.

Numerous European officials linked to the crisis had prior or current associations with Goldman Sachs: Lucas Papademos, then governor of Greece’s Central Bank; Petros Christodoulou, General Manager of Greece's Public Debt Management Agency; former Italian prime minister and finance minister Mario Monti; ex-Bundesbank board member Otmar Issing; then European Central Bank president Mario Draghi; and António Borges, head of the IMF’s European Department and former Vice Chairman at Goldman Sachs International. Additionally, Carlos Moedas, Portugal’s Secretary of State responsible for structural reforms under the Prime Minister, and Peter Sutherland, former Attorney General of Ireland and non-executive director at Goldman Sachs International, were former employees of the firm.

Employee perspectives

In March 2012, Greg Smith, who was then leading Goldman Sachs' U.S. equity derivatives sales in the EMEA region, resigned through an op-ed published in The New York Times, where he criticized the company's culture. He later wrote a book titled Why I Left Goldman Sachs. Many of Smith's assertions were unsupported by evidence, and The Observer accused him of deceitful behavior. Nevertheless, The New York Times chose not to retract the original article.

Two years later, in 2014, Steven George Mandis, a former Goldman portfolio manager, released What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences. Drawing on his twelve-year tenure at the firm and his doctoral research at Columbia University, Mandis described an "organizational drift" influenced by factors such as the company’s public offering. This shift transferred executive risks to shareholders and intensified growth demands, which in turn generated conflicts of interest.

In 2010, ex-employees Cristina Chen-Oster and Shanna Orlich initiated a gender discrimination lawsuit against Goldman Sachs. They alleged a workplace environment that permitted sexual harassment and wage inequality. The complaint highlighted exclusion from client-related events, frequent visits to strip clubs, and a pay gap where female vice presidents earned 21% less than their male peers.

Recommendations to short California bonds underwritten by Goldman Sachs

On November 11, 2008, the Los Angeles Times revealed that Goldman Sachs profited $25 million from underwriting California municipal bonds while simultaneously advising other clients to short those identical bonds. This apparent contradiction drew criticism from some observers. However, others pointed out that the distinct investment approaches employed by underwriting and trading units adhered to regulations governing Chinese walls. In fact, critics had called for even stronger separation between these departments.

Staff transitions between Goldman Sachs and U.S. government roles

Goldman Sachs encountered scrutiny in 2008 due to its extensive revolving door with senior U.S. government positions, prompting concerns about potential conflicts of interest. The frequent presence of former Goldman personnel in government circles earned the moniker "Government Sachs." Notably, Henry Paulson, a former CEO of Goldman Sachs, served as Treasury Secretary. Further controversy emerged when ex-Goldman lobbyist Mark A. Patterson was appointed chief of staff to Treasury Secretary Timothy Geithner, despite President Barack Obama's commitment to limit lobbyist influence. In February 2011, the Washington Examiner reported that Goldman Sachs was Obama's leading fundraiser during the 2008 campaign and that CEO Lloyd Blankfein had made ten visits to the White House.

Connections of former New York Fed Chairman with Goldman Sachs

Stephen Friedman, who previously served as a director at Goldman Sachs, was named Chairman of the Federal Reserve Bank of New York in January 2008. Although retired since 1994, he continued to hold shares in Goldman Sachs. In September 2008, when Goldman converted into a bank holding company, it came under Federal Reserve oversight instead of SEC jurisdiction. As Timothy Geithner transitioned from New York Fed president to Treasury Secretary, Friedman received a one-year exemption permitting him to remain a "class C" director despite owning stock in a regulated entity. He remained on the board through 2009 to help ensure stability during the upheaval following the Lehman Brothers collapse. Friedman asserted his ongoing participation was motivated by public service and denied any misconduct.

In May 2009, media attention focused on Friedman's stock purchases made at historically low prices toward the end of 2008, sparking worries about a possible conflict of interest given his regulatory role over Goldman Sachs. This led to his resignation on May 7, 2009. Although these acquisitions did not violate any Federal Reserve rules or policies, Friedman acknowledged that the Fed wished to avoid distractions and stated his intent was to demonstrate confidence amid market turmoil.

Insider trading incidents

In 1986, David Brown, an investment banker at Goldman Sachs, admitted guilt for conveying non-public information regarding a takeover transaction that eventually reached Ivan Boesky. Three years later, in 1989, Robert M. Freeman, a senior partner and Head of Risk Arbitrage who had been mentored by Robert Rubin, also pled guilty to insider trading involving both personal and firm accounts.

Rajat Gupta insider trading matter

In April 2010, Goldman Sachs board member Rajat Gupta was charged in connection with an insider trading investigation, accused of providing Raj Rajaratnam of the Galleon Group with confidential details about Berkshire Hathaway's $5 billion investment in Goldman during the 2008 financial crisis. Gupta had informed Goldman a month earlier that he would not seek reappointment as director. The United States Securities and Exchange Commission (SEC) brought civil charges against Gupta for disclosing sensitive information about Goldman Sachs and Procter & Gamble, where he also held a board position. Gupta had invested in certain Galleon hedge funds and maintained business relationships with Rajaratnam. The illicit information enabled Galleon-managed funds to generate illegal gains of $17 million from Goldman trades and over $570,000 from Procter & Gamble trades. Gupta denied all accusations and was also a member of the board at AMR Corporation.

In June 2012, Gupta was found guilty on four felony counts related to conspiracy and securities fraud tied to insider trading. Subsequently, in October 2012, he received a sentence of two years imprisonment, one year of supervised release, and a $5 million fine (~$ in ). He was released in January 2016 to complete the remainder of his sentence under home confinement. Although Gupta appealed the conviction, it was upheld in 2019.

Abacus synthetic CDOs and $550 million settlement (2010)

Starting in 2004, Goldman Sachs anticipated the unfolding subprime mortgage crisis, prompting some traders to adopt bearish positions on the housing market by creating mortgage-linked securities primarily as a hedge against potential losses. By late 2006, the firm’s overall outlook on the mortgage sector turned negative, leading to an increase in the issuance of these securities aimed not only at hedging but also at profiting from mortgage defaults. Business journalist Gretchen Morgenson observed that Goldman utilized CDOs to place substantial negative bets beyond mere hedging. Authors Bethany McLean and Joe Nocera noted that Goldman's portrayal as simply a 'market maker' became less accurate over time.

These instruments were synthetic CDOs, with payouts derived from premiums on credit default swaps rather than underlying mortgages. In this structure, Goldman and hedge funds held short positions by paying premiums, while investors such as insurance companies took long positions—receiving premiums but bearing risk if defaults occurred.

By April 2007, Goldman had issued more than 20 CDOs within its "Abacus" series amounting to $10.9 billion. Overall, between mid-2004 and mid-2007, Goldman structured, sold, and shorted 47 synthetic CDOs with a total face value of $66 billion.

Despite recognition for foresight, critics contended that Goldman's short positions created conflicts of interest since these securities performed poorly for investors. By April 2010, at least $5 billion worth of these instruments had either been downgraded to junk status or defaulted. A notable example was the $800 million Hudson Mezzanine CDO issued in 2006; Goldman both marketed this to investors and simultaneously took short positions against it. Executives stated they were offloading subprime assets from their balance sheets by packaging them into this CDO while holding short exposure. Critics highlighted that the prospectus misleadingly described the assets as "sourced from the Street," concealing Goldman's involvement in selecting them. By March 2008, defaults had triggered approximately $310 million in payouts benefiting Goldman and other short holders.

An internal email from Goldman revealed apprehensions about client dissatisfaction and potential harm to reputation stemming from these transactions.

Criticism also extended to losses impacting smaller public entities managing municipal funds. For instance, IKB Bank invested in Abacus through structured investment vehicles such as Rhinebridge, which issued debt bought by organizations including King County, Washington—responsible for financing schools, libraries, and public services. When these investments collapsed, King County suffered tens of millions in losses that affected local budgets.

Goldman publicly maintained that its short positions served as hedges and denied any intent to mislead investors regarding its bets against products it sold. The firm also faced accusations of exerting pressure on rating agencies like Moody's to assign higher credit ratings than justified. Senate inquiries revealed that rating decisions frequently encountered pressure due to competitive market dynamics since agencies receive payment from issuers.

2010 SEC civil fraud lawsuit

In April 2010, the U.S. Securities and Exchange Commission (SEC) filed charges against Goldman Sachs and its vice president, Fabrice Tourre, accusing them of securities fraud connected to a synthetic CDO named Abacus 2007-AC1. The SEC contended that Goldman Sachs misrepresented the nature of the asset selection process, asserting that an independent CDO manager, ACA Management, chose the underlying assets, whereas hedge fund Paulson & Co., which aimed to bet against the investment, played a "significant role" in selecting those assets. The securities underperformed substantially, with all bonds being downgraded within a year.

Unlike other Abacus transactions, Goldman Sachs did not take a short position on 2007-AC1 and reportedly incurred losses. Paulson engaged Goldman to structure the security and selected 90 BBB-rated mortgage bonds it anticipated would decline in value, compensating Goldman approximately US$15 million for this service. Paulson ultimately gained around US$1 billion, while investors such as IKB Deutsche Industriebank, ACA Financial Guaranty Corp, ABN AMRO, and the Royal Bank of Scotland absorbed the losses.

The SEC asserted that Goldman Sachs "materially misstated and omitted facts" by not revealing Paulson’s involvement in asset selection while portraying ACA as independent. Additionally, it alleged that Tourre deceived ACA regarding Paulson’s conflicting interests. Goldman denied any misconduct, claiming full transparency with investors, reporting a $90 million loss on the transaction, and noting ACA was the largest investor with $951 million committed. The firm argued that losses were due to broad sector declines rather than issues specific to this deal.

Reactions to the case were mixed: some analysts viewed Goldman’s defense as compelling, whereas securities law experts like Duke University's James Cox found validity in the SEC’s allegations given Goldman’s knowledge of Paulson’s role and efforts to minimize it. Critics pointed out that Paulson had been turned down by Bear Stearns on ethical grounds before collaborating with Goldman; Bear Stearns considered allowing an investor betting against the deal to pick collateral a severe conflict of interest.

The ethical debate extended beyond legal considerations. Goldman held advantages over other investors, including early awareness of worsening mortgage quality and prospectus warnings indicating it might possess material non-public information not available to others. European political figures, including British Prime Minister Gordon Brown, condemned Goldman for "moral bankruptcy," emphasizing risks to its global reputation.

On July 15, 2010, Goldman agreed to a settlement with the SEC and investors totaling US$550 million—the largest fine imposed on a Wall Street firm at that time—without admitting guilt but acknowledging incomplete disclosures in marketing materials and consenting to changes in its mortgage investment procedures.

Charges against Fabrice Tourre

The July 2010 settlement did not conclude allegations against Fabrice Tourre, Goldman's vice president and Abacus salesman. Tourre attempted unsuccessfully to dismiss the lawsuit, which proceeded to trial in 2013. On August 1, a federal jury found him liable on six out of seven counts related to misleading investors about the mortgage transaction; however, he was not found guilty of intentionally making false statements. Tourre avoided criminal charges or imprisonment but was fined $650,000 and ordered to forfeit a $175,000 bonus. Afterward, he shifted his career focus toward academia.

Allegations of Commodity Price Manipulation

Under a clause in the 1999 financial deregulation statute, the Gramm-Leach-Bliley Act, commercial banks are authorized to participate in any business activity deemed "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally." Following this, investment banks such as Goldman Sachs, Morgan Stanley, and JPMorgan Chase broadened their portfolios to include ownership stakes in various raw materials, covering commodities like foodstuffs, zinc, copper, tin, nickel, and aluminum.

Critics including Matt Taibbi contend that permitting firms to simultaneously manage critical physical commodity supplies and engage in trading related financial instruments resembles "allowing casino owners who take bets on NFL games during the week to also coach all teams on Sundays."

Goldman Sachs Commodity Index and the Food Price Surge from 2005 to 2008

In 2010, Frederick Kaufman of Harper's Magazine argued that the establishment of the Goldman Sachs Commodity Index (now known as the S&P GSCI) facilitated passive investors—such as pension funds and mutual funds—to speculate on food prices through financial products linked to this index. This speculative activity disrupted traditional supply and demand mechanisms, heightened price volatility, and compromised the price stabilization role typically played by futures markets.

Conversely, a June 2010 article in The Economist defended commodity investors and oil index-tracking funds by referencing an Organisation for Economic Co-operation and Development report. The report highlighted that price increases were also observed in commodities lacking futures markets or index fund participation during the same timeframe.

Accusations Regarding Aluminum Price and Supply Manipulation

Initially regarded as a conspiracy theory, journalist David Kocieniewski of The New York Times accused Goldman Sachs and other Wall Street entities in 2013 of leveraging deregulation to manipulate commodities markets, with a focus on aluminum. His claims were supported by financial documents and interviews. After acquiring aluminum warehousing firm Metro International in 2010, Goldman Sachs oversaw a rise in delivery wait times from six weeks to over sixteen months. This extension led to a doubling of spot market premiums, imposing costs exceeding $5 billion on U.S. consumers between 2010 and 2013. A significant factor cited was Goldman’s control over approximately one-quarter of the national aluminum inventory—1.5 million tons stored across 27 Metro warehouses located in Detroit. To meet London Metal Exchange regulations mandating daily metal movement, Goldman reportedly transferred aluminum between warehouses rather than dispatching it to manufacturers.

In August 2013, the federal Commodity Futures Trading Commission issued a subpoena to Goldman Sachs amid claims that its warehousing operations deliberately delayed shipments to drive up aluminum prices. Analyst Lydia DePillis observed that Goldman encouraged traders to retain metal longer in its facilities, thereby increasing storage fees ultimately passed on to buyers. A similar approach was reportedly employed by Glencore at its Vlissingen warehouse.

Bloomberg News columnist Matt Levine dismissed the conspiracy allegations as "pretty silly," attributing the circumstances more to structural inefficiencies than intentional manipulation by Goldman Sachs.

Goldman Sachs divested its aluminum warehousing division to Ruben Brothers in December 2014.

Subsequent legal proceedings included a 2015 antitrust lawsuit targeting Goldman Sachs, JPMorgan Chase, Glencore, and others. This case was initially dismissed due to insufficient evidence but was reinstated in 2019 following appellate court review. In 2021, it faced another dismissal; however, plaintiffs who had direct dealings with defendants were permitted to continue. These direct purchasers ultimately reached settlements with Goldman Sachs and JPMorgan Chase in 2022.

Speculation in oil futures

Investment banks such as Goldman Sachs have faced allegations of contributing to elevated gasoline prices by engaging in speculation on the oil futures exchange. In August 2011, leaked documents exposed substantial holdings by several financial institutions—Goldman Sachs, Morgan Stanley, JPMorgan Chase, Deutsche Bank, and Barclays—shortly before gasoline prices surged to their peak in the summer of 2008. These entities, possessing significant financial resources but lacking any physical oil production or ownership, had the capacity to considerably sway market prices. Journalist Kate Sheppard from Mother Jones characterized this activity as "artificially raising the price of crude." Conversely, other information indicated that just prior to crude oil reaching record levels in 2008, numerous major banks were actually wagering on price declines.

In April 2011, commentators Brad Johnson from Climate Progress and Alain Sherter of CBS MoneyWatch drew attention to Goldman Sachs’ cautionary statements about a hazardous spike in oil prices fueled by excessive speculative activity. Goldman Sachs reported that net speculative positions were quadruple those seen at the 2008 peak and acknowledged that speculators, including themselves, had artificially inflated oil prices by at least $20 above what supply and demand fundamentals would suggest. Despite these admissions, Goldman Sachs and other firms actively opposed Commodity Futures Trading Commission regulations aimed at imposing "position limits" on futures contracts designed to restrict speculative trading.

By 2012, Joseph P. Kennedy II observed that "hedge funds and bankers" were injecting billions of speculative dollars into commodity markets, competing for a finite number of oil barrels and driving up prices. This problem dates back to 1991 when Goldman Sachs successfully persuaded the Commodity Futures Trading Commission to classify Wall Street dealers placing substantial oil bets as legitimate hedgers, thus exempting them from regulatory trading limits. This exemption facilitated billions of dollars in speculative trades; by 2008, eight investment banks constituted 32% of the entire oil futures market.

Inappropriate securities lending practices

In January 2016, Goldman Sachs consented to pay $15 million following revelations that employees between 2008 and 2013 had "granted locates" by arranging securities borrowings for short sales without sufficient oversight. U.S. regulations mandate that brokerages must have agreements or "reasonable grounds" to borrow securities before executing short sales. Furthermore, in 2013, Goldman Sachs provided SEC compliance examiners with responses regarding its securities lending protocols that were deemed "incomplete and unclear."

1MDB Malaysian sovereign wealth fund controversy (2015–)

Based on Thomson Reuters league tables, Goldman Sachs dominated as the top foreign investment bank in Malaysia from 2011 through 2013, capturing a 21% share of the country's investment banking market—twice that of its closest competitor—primarily due to its dealings with the Malaysian sovereign wealth fund, 1Malaysia Development Berhad (1MDB).

In 2015, U.S. authorities initiated investigations into Goldman Sachs’ involvement in assisting 1MDB with raising over $6 billion. The bond transactions yielded "above-average" commissions and fees for Goldman Sachs amounting to nearly $600 million, representing more than 9% of the total proceeds.

Beginning in 2016, scrutiny intensified over a $3 billion bond structured by Goldman Sachs for 1MDB. Prosecutors examined whether the bank violated the U.S. Bank Secrecy Act by failing to report suspicious activities as required under regulatory obligations.