NEW YORK CITY, New York: Goldman Sachs has agreed to settle a shareholder lawsuit accusing it of misleading investors over its role in the 1MDB scandal, marking another step in the long-running fallout from one of the world's biggest financial fraud cases.

In a letter filed in Manhattan federal court, Goldman and the shareholders said they had reached an agreement in principle and expect to submit the settlement for preliminary approval by May 20. Financial terms were not disclosed.

The lawsuit alleged that Goldman defrauded shareholders by downplaying risks tied to its work for 1MDB, a Malaysian sovereign wealth fund at the center of a global corruption scandal.

Former Malaysian Prime Minister Najib Razak established 1MDB to promote economic development, with assistance from financier Jho Low, who remains a fugitive.

Authorities in the United States and Malaysia have said about US$4.5 billion was siphoned from the fund, with money routed through offshore accounts and shell companies linked to Low.

Goldman helped 1MDB raise $6.5 billion through bond sales and earned roughly $600 million in fees, according to court filings.

Shareholders claimed the bank misrepresented its role while emphasizing what it described as strong risk controls. They said the bank's stock fell sharply after details of the scandal emerged and investors realized Goldman had "actively facilitated - and handsomely profited from" the fraud.

Goldman declined to comment on the settlement, while lawyers representing shareholders, led by Swedish pension fund Sjunde AP-Fonden, did not immediately respond to requests for comment.

The case is one of several legal challenges Goldman has faced over 1MDB. In 2020, the bank agreed to pay $2.9 billion in penalties and have a Malaysian subsidiary admit criminal wrongdoing to resolve investigations by the U.S. Department of Justice and other authorities.

A U.S. court formally closed the criminal case in May 2024 after Goldman completed a three-year deferred prosecution agreement.

Individual bankers were also implicated. One Goldman banker was convicted for his role in the scheme, while another pleaded guilty.

The settlement, once finalized, would draw a line under one of the remaining shareholder claims linked to the scandal, which has spanned multiple jurisdictions and triggered regulatory scrutiny worldwide.