S&C Secures Sixth Circuit Dismissal of Auction Rate Securities Action for Goldman SachsJanuary 26, 2017
S&C persuaded the Sixth Circuit to affirm the dismissal of a federal court action filed by William Beaumont Hospital (“Beaumont”) arising out of Beaumont's issuance of auction rate securities (ARS) and entry into related interest rate swaps. Beaumont contended that, as underwriter, Goldman Sachs misrepresented how the ARS market functioned and its risks. The Sixth Circuit panel unanimously held that Beaumont's claims failed to state a claim under Rule 12(b)(6) or to meet the heightened pleading standards of Rule 9(b), because Beaumont could not sufficiently identify any alleged instances of fraud or misrepresentation by Goldman Sachs. This decision follows earlier court victories that S&C achieved for Goldman Sachs on ARS issuer cases in the Second Circuit, Ninth Circuit, Southern District of New York, and District of New Mexico.
The S&C team advising Goldman Sachs on this and a number of other ARS-issuer litigations and arbitrations consists of David Braff, Matthew Schwartz (who argued the appeal) and Andrew Reynard.