NEW YORK (Reuters) - Goldman Sachs Group Inc (GS.N) has won the dismissal of a $510 million lawsuit in New York brought by a private equity firm that accused the Wall Street bank of shortchanging it in a merger to “curry favor” with Malaysia’s prime minister.
In a decision made public on Friday, Justice O. Peter Sherwood of a state court in Manhattan said the lawsuit by Primus Pacific Partners LP “had no substantial nexus with New York,” and should be heard in another forum.
Primus had sought damages from Goldman and former star banker Tim Leissner, accusing them of providing bad merger advice in 2010 to Goldman client EON Capital, in which Primus held a 20 percent stake.
The plaintiff said the advice reflected alleged Goldman conflicts of interest with Malaysian Prime Minister Najib Razak and Malaysia’s 1MDB sovereign wealth fund.
A lawyer for Primus did not immediately respond to requests for comment. Goldman spokesman Michael DuVally declined to comment.
Primus sued in July 2016, a week after the U.S. government moved to seize $1 billion of assets bought with money it said people close to Najib stole from 1MDB, including some money from bond offerings arranged by Goldman.
The 1MDB fund, whose full name is 1Malaysia Development Berhad, has been dogged by a multibillion-dollar scandal and money-laundering probes in at least six countries. Najib has denied wrongdoing
Primus had accused Goldman of advising EON to sell itself to Malaysia’s Hong Leong Bank Bhd (HLBB.KL) at a lower price that it could have fetched.
It said Goldman did this to “curry favor” with Najib, who had one brother on Hong Leong’s board, and another who worked for a firm advising Hong Leong on its bid.
The lawsuit sought at least $170 million in damages, representing Primus’ alleged losses from the underpricing of EON, plus at least $340 million in punitive damages.
But in his decision dated Nov. 9, Sherwood said Malaysia had a “greater interest than New York” in transactions involving sales of its banks, and had already heard a case filed by Primus over the EON sale.
He also said all of the alleged wrongs stemmed from conduct in Malaysia, and most witnesses were located outside the United States.
Najib, his brothers, and 1MDB were not named as defendants.
Primus said it learned of Goldman’s alleged fraud in March 2016, after media began detailing Leissner’s alleged dealings with Najib and his eventual dismissal by Goldman.
The case is Primus Pacific Partners I LP v Goldman Sachs Group Inc et al, New York State Supreme Court, New York County, No. 653885/2016.
Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis and Diane Craft