Judge Doesn't Care About Hookers In Goldman v Libya Ruling

Sorry Libya (and hookers).
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With all that's gone on over the last few months-- the implosion of John Stumpf's career, the implosion of Deutsche Bank, the implosion of the Republican party-- you might have forgotten that there was a little trial going on between Goldman Sachs and the Libyan Investment Authority. The two parties met in court because the LIA decided to sue Goldman, claiming the bank took advantage of it vis-à-vis nine equity derivatives trades the Libyans didn't understand, costing the LIA $1.2 billion and scoring Goldman Sachs a profit of $222 million. Additionally, the LIA claimed that Goldman not only took advantage of their employees' financial naivete but manipulated them by giving some kid an internship, taking them on lavish vacations, and buying them hookers. For its part, Goldman Sachs has argued the Libyans knew exactly what they were doing and blamed Goldman for the losses out of a fear of being executed.* Today, a judge said she agreed with the bank, hookers or no.

“The key people in the LIA who needed to understand the trades did discuss and agree the structure of the trades with Goldman Sachs,” the judge said. “There are no grounds for concluding that the level of profits earned by Goldman Sachs on the disputed trades was excessive.” [...] Goldman’s court win came after a trial that included salacious allegations against the U.S. bank. Among these, the LIA alleged Youssef Kabbaj, a former Goldman banker who worked closely with the Libyans, paid for two prostitutes in Dubai to entertain himself and Mr. Zarti’s younger brother, Haitem. Mr. Kabbaj denied paying for a prostitute for the young man. He declined to comment on whether he paid for a prostitute for himself. “I fully accept that the extent of the entertainment offered by Mr. Kabbaj to Haitem was inappropriate and in flagrant breach of Goldman Sachs’ policy on entertaining clients,” Ms. Rose said in her judgment. “However, it does not seem to me relevant to the matters I have to decide.”

Goldman Sachs Wins Legal Battle With Libyan Wealth Fund [WSJ]
Goldman Sachs Wins Suit Over $1.2 Billion Libyan Fund Losses [Bloomberg]

*Per the testimony of Andrea Vella, co-head of Asian investment banking: "If we put ourselves in Libya at the time, it can��t have been easy to have been the person or the team that decides to make an investment and loses a billion dollars while the market is melting down. And so at that point you either get, you know, executed, maybe to use a hyperbole, or you put the blame on someone else."

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