April 13, 2021

Warren and Smith Ask Regulators To Deny Special Regulatory Favors for Goldman Sachs After 1MDB Scandal

Goldman seeks Labor Department waiver to allow management of retirement funds despite admission of criminal wrongdoing in 1MDB bribery scandal

"Companies that are convicted of or plead guilty to fraudulent schemes do not deserve special government favors"

Text of Letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) sent a letter to Deputy Assistant Secretary Timothy Hauser of the Employee Benefits Security Administration (EBSA) at the Department of Labor (DOL) opposing regulatory favors under consideration that would allow Goldman Sachs Group Inc. (Goldman Sachs) to evade the full consequences of its impending admission of criminal wrongdoing for its subsidiary's role in the Malaysian 1MDB global bribery scandal. The senators are calling on EBSA not to give Goldman a proposed exemption from EBSA rules that would allow the company, after its admission of wrongdoing, to manage clients' retirement plans.

The 1MDB scandal is not the first time Goldman Sachs or its affiliates have run afoul of federal law, but EBSA has proposed an exemption for Goldman that would allow it to retain its status as a "qualified professional asset manager" (QPAM). Under EBSA regulations, a financial entity cannot retain QPAM status if it has been convicted of criminal activity involving trust management. The exemption therefore appears to give EBSA's blessing to Goldman's illegal behavior, eliminating a key consequence of the settlement. 

"Companies that are convicted of or plead guilty to fraudulent schemes do not deserve special government favors," wrote the senators. "We have long been concerned about the federal government's unwillingness to impose on white collar and corporate criminals the penalties necessary to deter future wrongdoing and protect consumers, taxpayers, and families."

"Exempting corporations from consequences for misconduct and allowing Wall Street's most powerful bad actors to continue business as usual flies in the face of that obligation to the public," the senators continued. "You have the opportunity to send a clear message that the federal government holds corporate criminals accountable for their misdeeds and does not give them special regulatory favors. We ask that you review and rescind this proposal."

This letter is part of Senator Warren's ongoing efforts to hold giant corporations accountable for criminal, corporate misconduct.

  • In April 2019, Senator Warren introduced the Corporate Executive Accountability Act, which would hold executives of large corporations criminally responsible when their companies commit crimes, harm large numbers of Americans through civil violations, or repeatedly violate federal law.
  • In May 2021, Senator Warren and Representative Pramila Jayapal (D-Wash.) released "Rigged Justice 2.0," the second in a series of reports on the failure of the federal government to hold corporate and white-collar criminals accountable. The first in the series was released in February of 2016.