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What happened
Shares of investment banking giant Goldman Sachs (NYSE: GS) are plunging today, on track for their worst one-day decline in seven years. As of 2:45 p.m. EST, the stock is down by more than 7% and has a new 52-week low.
So what
The drop can be attributed to two main factors.
First, the market is generally weak today, with the Dow Jones Industrial Average off by more than 400 points as of this writing. Most of Goldman's peers are significantly lower, and the financial sector is down 1.3%.
Image source: Getty Images.
Second, Malaysia's finance minister is demanding a refund of management fees. In all, the amount of fees Malaysia is trying to get back total $ 600 million. This is in addition to potential fine Goldman could face the U.S. Justice Department in relation to the failed "1MDB" investment fund.
Now what
Unfortunately, they are very important to you when you're talking about multibillion-dollar investment funds.
In this case, it is important to mention that Goldman Sachs has not agreed to any of the fees Malaysia's finance minister is seeking, nor is there any indication that it will (as of this writing). If it does not, it's possible that it could weigh on Goldman's profits in the short term, but it is not likely to be a long-term drag on the company.
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