Deutsche (DB), JPMorgan (JPM) Sued by Malaysia Over 1MDB

Malaysia’s 1Malaysia Development Bhd. (1MDB) and SRC International Sdn Bhd (“SRC”) have filed lawsuits against JPMorgan Chase JPM and Deutsche Bank DB to recoup assets worth more than $23 billion.  

The lawsuit is related to a scandal that involves misappropriation of funds worth $4.5 billion, from 1MDB by top officials of the fund and their colleagues from 2009 through 2014.

In August 2020, The Goldman Sachs Group GS entered into the long-awaited settlement with the Malaysian Government. The terms include payment of $2.5 billion as penalties. Also, Goldman guaranteed that the authorities would receive $1.4 billion from the proceeds of assets, which have been seized globally as those were related to the 1MDB scandal.

Per the Malaysian Finance Ministry, both entities have filed a total of 22 civil suits. Of these six were filed by 1MDB, and the remaining by SRC.

Notably, 1MDB is claiming $1.11 billion from Deutsche Bank’s unit at Malaysia, $800 million from J.P. Morgan’s Swiss unit and $1.03 billion from a Swiss-based Coutts unit, and interest payments from all of them, according to a Reuters article.

Recently, The U.S. Department of Justice dropped its investigation regarding Deutsche Bank’s role in state fund 1MDB scandal, as the bank had helped the fund to raise $1.2 billion in 2014. The inquiry, which started in July 2019, involved judging whether the bank violated foreign corruption or anti-money-laundering laws.

Malaysia’s Finance Minister stated, “Following significant and successful settlements with Goldman Sachs, AmBank Group and Deloitte PLT, the Government’s recovery efforts are now focused on pursuing other wrongdoers who have caused losses to 1MDB and/or SRC during the execution of their duties, as parties directly or indirectly involved in 1MDB and/or SRC’s various operations and transactions.”

“As previously mentioned, the government will not rest until all those involved are made fully accountable for the wrongdoings caused to the country through their involvement in 1MDB and/or SRC.” he added.

Shares of JPMorgan and Deutsche Bank have gained 42.2% and 32.9%, respectively in the past six months.

JPMorgan currently has a Zacks Rank #2 (Buy), while Deutsche Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another stock worth considering in the finance space is UMB Financial Corporation UMBF. The stock has been witnessing upward estimate revisions for the past 30 days. Additionally, it’s shares have jumped nearly 44% in the past six months. It currently carries a Zacks Rank of 2.

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