Goldman Sachs Group Inc. (NYSE:GS) dropped after Morgan Stanley (NYSE:MS) downgraded the investment bank to “equal-weight” over the risks surrounding the investigation of Goldman’s role in raising funds for the Malaysian state fund 1MDB.
Citing published media reports, Morgan Stanley said in a research note Wednesday that the US Justice Department has announced criminal charges against two former Goldman bankers: Tim Leissner and Roger Ng.
Shares of Goldman dropped $2.90 to $189.70 on Friday.
While Goldman is cooperating with the investigation, it is unclear how long the issue will take to resolve, what the fines and penalties could be and what costs Goldman will face in order to satisfy regulators, according to Morgan Stanley.
Morgan Stanley said Goldman’s stock appears cheap at 7.1 times projected 2019 earnings per share but added that it doesn’t “see a catalyst for significant multiple expansion until the issue is resolved.”
A Goldman spokesman declined to comment.
— This story was updated to give Goldman's stock price.
Contact Dennis Fitzgerald at [email protected]