Goldman to face Libya's sovereign wealth fund in court over trades

By Reuters

Aug 19, 2014 09:50 AM EDT

Goldman Sachs (GS.N) and Libya's sovereign wealth fund are set to meet in a London court over claims the Wall Street bank exploited a position of trust by encouraging the fund to invest more than $1 billion in trades that ended up worthless.

Goldman had filed a summary judgment application - a request to decide a claim without going to trial - in the case brought by the Libyan Investment Authority (LIA) in January, but has recently withdrawn it, the LIA said in a statement.

"Following the serving of the LIA's reply evidence, Goldman Sachs has withdrawn its summary judgment application," the LIA said.

A case management hearing has now been scheduled for early October.

Goldman did not immediately respond to requests for comment. A spokesperson previously described the claims as without merit and said the bank would defend them vigorously.

The LIA brought a lawsuit to London's High Court over a series of equity trades executed between January and April 2008 that expired as worthless in 2011.

The fund, which became a Goldman client in 2007, alleges that the bank deliberately exploited the relationship of trust and confidence it had established with LIA staff, causing the fund to enter into the disputed trades.

The LIA estimates that Goldman made substantial profit of around $350 million on the trades, while it was left with "colossal" losses.

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