Global investment bank Goldman Sachs stands accused of deliberately exploiting the sovereign wealth fund of Libya in order to make "substantial" profits of $350 million, according to a legal filing with London's high court seen by CNBC.
The Libyan Investment Authority (LIA), set up in 2006 to manage the country's oil wealth, claims that the bank knew of the fund's lack of financial expertise but encouraged it to enter a number of complex financial derivative transactions earning Goldman Sachs a "very large" premium.
A spokesperson for Goldman Sachs told CNBC that the claims were "without merit" and that it would defend them vigorously.
(Read More: Goldman's big Utah bet pays off handsomely)
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, the filing said. The LIA claims that it entered the transactions without understanding the clear nature of the trades and without the benefit of independent legal or financial advice.
"They were described as 'structured investments' or 'structured investments in listed equity stocks'," according to the LIA in the document seen by CNBC and first reported by Bloomberg. "The LIA entered into the relevant trade acting with Goldman's encouragement and under its influence."
(Read More: Goldman: Cut your emerging markets exposure by a third)