A record fine has been slapped on the Asian unit of a major Wall Street bank by Hong Kong’s regulators for its role in Malaysia’s worst financial scandal in recent memory. The heavy penalty of US$350 million against Goldman Sachs (Asia) for underwriting 1MDB’s bond sales is meant as a deterrent. The Securities and Futures Commission (SFC) needs to send a strong signal that it is keeping a close eye on financial malpractice to maintain the city’s reputation as an international financial hub with a clean environment for business. The 1Malaysia Development Berhad was a corrupt state fund whose exposure toppled the previous government of prime minister Najib Razak and spanned multiple jurisdictions. Goldman’s unit in Hong Kong ultimately received almost US$210 million in fees, the largest share out of the American bank’s numerous units tainted by the scandal. Goldman settled the criminal proceedings with the Malaysian government in August for US$3.9 billion in total. Former Goldman Sachs (Asia) partner Tim Leissner has been banned for life from working as a securities and financial adviser in the city. He pleaded guilty in August 2018 to money laundering and corruption charges brought by the US Department of Justice. Hong Kong slaps record fine on Goldman Sachs for 1MDB bond sales Leissner admitted that he had conspired with Malaysian fugitive financier Low Taek Jho , also known as Jho Low, and others to pay bribes and kickbacks to Malaysian and Abu Dhabi officials, to secure business from 1MDB for Goldman Sachs, including the bond offerings. According to US prosecutors, US$4.5 billion was siphoned from 1MDB between 2009 and 2014. Despite the Goldman case coming to a close, there is unfinished business for SFC chief executive Ashley Alder, who has postponed his retirement by three years to complete several major cases. Among these is the so-called Enigma Network, one of the local bourse’s worst financial scandals, involving an association of dozens of small but closely linked publicly traded companies that had simultaneous large falls in their share prices in 2017. For Hong Kong to maintain its status as a global financial centre, attracting business in underwriting, mergers and acquisitions, and initial public offerings is critical. But what sets a healthy financial hub apart from becoming a nest of vipers is the rule of law, a clear enforcement of regulations and strict penalties for miscreants. Goldman’s fine underscores the need to enforce rules and penalise those who commit misdeeds. This is especially so as the IPO process has been streamlined and made easier while the market is awash with easy money, thanks to historic low borrowing costs. To protect the local market’s credibility, a watchdog such as the SFC must show its regulatory teeth and bite down hard on those who try to corrupt the system.