Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

The thing with the kind of investigation currently engulfing Malaysia's sovereign investment fund 1MDB is that it's hard to assess where the risk for investors ends. Unless you know exactly who was involved and to what extent, you might have to add a premium or a discount for companies with potential dotted lines to the eye of the storm.

The Monetary Authority of Singapore said Thursday it had found "instances of control failings" in the local units of UBS and Standard Chartered, as well as at the country's biggest bank, DBS Group Holdings. The regulator also pointed to "substantial breaches" of money-laundering regulations at Falcon Private Bank. Add to that list Goldman Sachs, JPMorgan Chase and Deutsche Bank, which have been named in investigations in the U.S. None has been accused of wrongdoing, and all have said they're cooperating with the probes.

Still, their shareholders are paying the price. The stock of Goldman, which was the bank of choice for most of 1MDB's mergers and acquisitions as well as its offshore bonds, suffers a bit every time the lender's name comes up in a news item on the probe of the sovereign wealth fund.

Anchored in Malaysia
Headlines involving Goldman Sachs and 1MDB have been a drag on the bank's stock price
Source: Bloomberg

Ultimately, profits could be affected at some of the companies named. Singapore has already taken the unusual step of closing the local unit of BSI, a Swiss bank, for alleged breaches of money-laundering rules. The state could slap fines on others, as could the U.S. authorities. At this stage, any attempt to show the cost to shareholders would be guesswork. 

Rough Ride
Dollar bonds of 1MDB have been volatile despite government ties. Some of those swings could spill over to companies with links to the fund
Source: Bloomberg

What's becoming clearer, however, is that the list of those embroiled may be far from closed. Look at another probe gone wild: Petrobras, the Brazilian state-owned oil company. What started as an investigation into an acquisition ended up bringing some of the nation's biggest construction companies to their knees, and involving a host of international firms. It's still going on.

Shareholders of companies in Malaysia and of banks with dealings in the country may now feel they should be asking at every opportunity: Have you done business with 1MDB? Whether that business was legal or not isn't the issue; the very name may have become a liability.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Christopher Langner in Singapore at

To contact the editor responsible for this story:
Paul Sillitoe at