S&C Representing Goldman Sachs in Supreme Court Securities Case

December 18, 2020

In one of the most closely watched securities class actions in recent years, the U.S. Supreme Court on December 11 granted a certiorari petition by Goldman Sachs and its former senior officers seeking review of a judgment of the U.S. Court of Appeals for the Second Circuit. The petition concerns the standards to be applied by courts when defendants seek to rebut the “fraud-on-the-market” presumption of class-wide reliance established by the Supreme Court in its 1988 ruling in Basic Inc. v. Levinson

Reuters stated that this appeal, Goldman Sachs Group v. Arkansas Teacher Retirement System, “could redefine the ability of shareholders to pursue class actions against public companies whose stock prices fall.”

Goldman Sachs' petition raised two issues: (i) whether a defendant in a securities class action may rebut the Basic presumption of class-wide reliance by pointing to the generic nature of the alleged misstatements in showing that the statements had no price impact, even though that evidence is also relevant to the substantive element of materiality; and (ii) whether a defendant seeking to rebut the Basic presumption has only a burden of production or also the ultimate burden of persuasion.

Goldman Sachs was supported by multiple amici, including the U.S. Chamber of Commerce, Securities and Financial Markets Association, Bank Policy Institute, American Bankers Association, Society for Corporate Governance, Retail Litigation Center and Washington Legal Foundation, as well as financial economists, former SEC officials and law professors.

The team representing Goldman Sachs and its senior officers includes partners Richard Klapper, Robert Giuffra Jr., David Rein, Benjamin Walker, and Julia Malkina, as well as special counsel Jacob Cohen.