In one of the most closely watched securities class actions in recent years, the United States Supreme Court on June 21 ruled 8-1 in favor of Goldman Sachs and remanded a case testing the standards for rebutting the “fraud-on-the-market” presumption of class-wide reliance established by the Supreme Court in Basic v. Levinson. The Court held that the U.S. Court of Appeals for the Second Circuit should have considered the generic nature of Goldman Sachs’s alleged misstatements in determining whether those statements impacted the price of Goldman Sachs’s stock, which is a requirement for certifying a shareholder class.
CNBC stated that the ruling in Goldman Sachs Group v. Arkansas Teacher Retirement System, authored by Justice Amy Coney Barrett, “handed a victory to Goldman Sachs.”
Sullivan & Cromwell helped Goldman Sachs secure the Supreme Court’s grant of its certiorari petition in December 2020 to review the Second Circuit decision affirming class certification. The Firm obtained broad amici support for Goldman Sachs, including from the U.S. Chamber of Commerce, Securities and Financial Markets Association, Bank Policy Institute, American Bankers Association, former Securities and Exchange Commission officials and law professors. The Firm previously secured the grant of a second discretionary appeal when the Second Circuit granted Goldman Sachs’ petition for interlocutory review of the lower court’s decision certifying the class.
The S&C team included Richard Klapper, Robert Giuffra Jr., David Rein, Benjamin Walker, Julia Malkina and Jacob Cohen. The Firm worked with Paul, Weiss, Rifkind, Wharton & Garrison on the Supreme Court appeal.