What happened 

Shares of investment banking giant Goldman Sachs (NYSE:GS) are plunging today, on track for 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 hit a new 52-week low.  

So what 

The drop can be attributed to two main factors.  

First, the stock market in generally is rather 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 as well, and the financial sector as a whole is down by 1.3%. 

Two businesmen looking at financial information on an array of computer screens.

Image source: Getty Images.

Second, Malaysia's finance minister is demanding a refund of management fees it paid to Goldman Sachs as part of a bond investment fund that resulted in a major scandal. In all, the amount of fees Malaysia is trying to get back total $600 million. This is in addition to potential fines Goldman could face from the U.S. Justice Department in relation to the failed "1MDB" investment fund.

Now what 

Unfortunately, fines and legal risk are part of the banking business, especially when you're talking about multibillion-dollar investment funds.  

In this case, it's important to mention that Goldman Sachs hasn't agreed to pay back 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, it's fair to say that it could weigh on Goldman's profits in the short term, but it isn't likely to be a long-term drag on the company.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.