UPDATE 1-Goldman set to face Libya's sovereign wealth fund in court over trades

Tue Aug 19, 2014 8:31am EDT

(Adds Goldman comment)

LONDON Aug 19 (Reuters) - Goldman Sachs 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without going to trial - in the case brought by the Libyan Investment Authority (LIA) in January, but had recently withdrawn it, the LIA said in a statement.

"Following the serving of the LIA's reply evidence, Goldman Sachs has withdrawn its summary judgment application," the LIA said.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

Goldman said in a statement on Tuesday: "We continue to believe this case is entirely without merit and intend to contest it vigorously as it moves through the legal process."

The LIA had filed its lawsuit at London's High Court over a series of equity derivatives trades executed between January and April 2008 that expired as worthless in 2011.

The fund, which became a Goldman client in 2007, alleges 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 Goldman made a profit of around $350 million on the trades, while it was left with "colossal" losses. (Reporting by Clare Hutchison; Editing by David Evans and David Holmes)