Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System

Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Business Law
  • Date Filed: June 21, 2021
  • Case #: 20-222
  • Judge(s)/Court Below: BARRETT, J., delivered the opinion of the Court, in which ROBERTS, C. J., and BREYER, KAGAN, and KAVANAUGH, JJ., joined in full; in which THOMAS, ALITO, and GORSUCH, JJ., joined as to Parts I and II–A; and in which SOTOMAYOR, J., joined as to Parts I, II–A–1, and II–B. SOTOMAYOR, J., filed an opinion concurring in part and dissenting in part. GORSUCH, J., filed an opinion concurring in part and dissenting in part, in which THOMAS and ALITO, JJ., joined.
  • Full Text Opinion

The generic nature of a misrepresentation is important evidence of price impact, even though that same evidence may be relevant to materiality. Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 568 U.S. 455 (2013).

Respondent shareholders filed a securities-fraud class action against The Goldman Sachs Group, Inc., (Petitioner). In the class action, Respondents alleged that Petitioner violated 15 U.S.C. § 78j(b) and 15 CFR § 240.10b-5 by maintaining an artificially inflated stock price by repeatedly making false and misleading statements about its ability to manage conflicts. On remand by the Second Circuit, the District Court certified the class, and found that (1) Petitioner’s alleged misrepresentations were irrelevant to the price impact inquiry, and (2) that Petitioner’s failed to show by a preponderance that its alleged misrepresentations had no price impact. The Second Circuit affirmed. The Court held that the generic nature of a misrepresentation is important evidence of price impact, even though that same evidence may be relevant to materiality. Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 568 U.S. 455 (2013). The Court reasoned that because the Second Circuit's decision left significant doubt as to whether there was a thorough review of the entire record, remand is necessary for the Second Circuit to review all record evidence relevant to price impact. Further, the Court reasoned that Federal Rule of Evidence 301 does not constrain the Court's authority to shift the burden of persuasion under a federal statute and that Basic allocates the burden of persuasion to defendants in a price impact inquiry. Vacated and remanded.

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