Goldman Sachs Group v. Arkansas Teacher Retirement System

(1) Whether a defendant in a securities class action may rebut the presumption of classwide reliance recognized in Basic Inc. v. Levinson by pointing to the generic nature of the alleged misstatements in showing that the statements had no impact on the price of the security, even though that evidence is also relevant to the substantive element of materiality. (2) Whether a defendant seeking to rebut the Basic presumption has only a burden of production or also the ultimate burden of persuasion.

Respondents brought forward a securities class action against Petitioners under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5(b), alleging that Petitioners made material misrepresentations regarding their conflict of interest risks. Respondent deemed Petitioner's generic and aspirational statements fraudulent. The district court denied petitioner's motion to dismiss because, as a matter of law, the alleged misstatements were immaterial. Respondents moved, and the district court granted, a motion to certify the class. The court of appeals vacated the district court’s order because the district court failed to apply the preponderance-of-the-evidence standard for determining whether petitioners had rebutted the presumption in Basic Inc. v. Levinson. On remand, the district court again granted Respondents’ motion for class certification, concluding Petitioners failed to rebut the presumption in Basic by a preponderance of the evidence. The court of appeals again granted, and later affirmed, Petitioners’ petition for an interlocutory appeal under Rule 23(f). Petitioners argue that the alleged misstatements were too general and vague for a reasonable shareholder to have relied on them in determining the value of Petitioners’ stock, that the statements had no impact on its stock price, and any loss the shareholders suffered was due to something other than the corrective disclosures.