S&C Wins Significant Securities Class Action Appeal

January 12, 2018

In an important ruling for class certification standards in securities class actions, S&C obtained on behalf of Goldman Sachs and its senior executives an appellate ruling vacating a lower court decision certifying a multi-year class of Goldman Sachs shareholders. The case stems from the SEC's highly-publicized lawsuit filed in 2010 accusing Goldman Sachs of misconduct in a collateralized debt obligation called ABACUS. The Plaintiffs alleged that the conduct revealed by the SEC's lawsuit and subsequent enforcement actions rendered false Goldman Sachs' statements about its management of conflicts and business principles. S&C obtained dismissal of some of the claims in 2012 and, in September 2015, Judge Paul Crotty of the U.S. District Court for the Southern District of New York granted the plaintiffs' class certification motion.

Ten amicus briefs were filed in the appeals court reflecting the significance of this appeal. S&C persuaded the U.S. Court of Appeals for the Second Circuit to vacate the lower court decision. S&C argued that the Defendants were held to the wrong standard of proof when they sought to rebut the fraud-on-the-market presumption of reliance by showing that the allegedly false statements had no “price impact.” S&C also argued that the lower court incorrectly excluded their expert evidence demonstrating that the challenged statements had no impact on Goldman Sachs' stock price. The Second Circuit held that Defendants should not have been required to show a “complete absence of price impact” and ordered the district court to reconsider class certification under the preponderance of the evidence standard. The appeals court also instructed the district court to consider on remand the Defendants' expert evidence regarding price impact.

Robert Giuffra argued the appeal on behalf of Goldman Sachs and was named “Litigator of the Week” by AmLaw Litigation Daily for the sixth time for the win. The S&C team was also led by Richard Klapper and David Rein, along with Jacob Cohen. Theodore Edelman and Benjamin Walker also participated in earlier stages of the litigation.