Skip to comments.How Goldman's Libya case could disrupt derivatives
Posted on 10/21/2014 7:47:02 AM PDT by Lorianne
A costly legal battle between Goldman Sachs and the Libyan sovereign wealth fund could have more permanent repercussions for the global banking industry, experts have told CNBC.
The Libyan Investment Authority has accused Goldman of misleading it and taking advantage of its lack of financial knowledge to make "substantial" profits on a series of derivative trades back in 2008. The bank denies the allegations and a full hearing has been touted to begin in early 2016 after a preliminary hearing was completed earlier in the month.
The LIA claims the disputed derivative trades in early 2008 cost $1 billion, and carried a high degree of risk, but lost a substantial amount of value by the end of the year and expired "worthless" in 2011. Court documents allege that Goldman made profits of $350 million and a witness statement from a lawyer working for the LIA claims that the usual disclaimers - called non-reliance agreements - were sent after the trades were made and were never signed.
Satyajit Das, an expert on financial derivatives and risk management, told CNBC via telephone that the case has the potential to get "extremely ugly".
(Excerpt) Read more at cnbc.com ...
“He who sups with the devil should have a long spoon.”
I suppose the Libyans were failed to use the appropriate utensils....
What is it they say happens when you lie down with dogs, oh yeah you get fleas.
Derivatives time bomb.
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