CITY OF WASHINGTON (June 21, 2021)— today the U.S. Supreme Court vacated and remanded the “Goldman Sachs securities-fraud class action alleging that The Goldman Sachs Group, Inc., and certain of its executives (collectively, Goldman) violated securities laws and regulations prohibiting material misrepresentations and omissions in connection with the sale of securities.”
The Court wrote “Plaintiffs allege that Goldman maintained an artificially inflated stock price by repeatedly making false and misleading generic statements about its ability to manage conflicts. Under Plaintiffs’ inflation-maintenance theory, Goldman’s alleged misrepresentations caused its stock price to remain inflated until the market reacted to
the truth about Goldman’s practices—at which point Goldman’s stock price dropped and Plaintiffs suffered losses. Seeking to certify a class of Goldman shareholders harmed by reliance on Goldman’s alleged
misrepresentations.” Results–Goldman set up the markets to respond to its misrepresentation–fake information. As long as Sachs misrepresentation was not discoverable by the investors–Sachs made money but on the back of the investors lost–based on Sachs’ false information.
The US Supreme Court ruled in favor of the investors. The Court wrote “The parties now accept this legal framework but dispute whether the Second Circuit properly considered the generic nature of Goldman’s alleged misrepresentations. Because the Court concludes that the Second Circuit’s opinions leave sufficient doubt on this question, the Court remands for the Second Circuit to consider all record evidence relevant to price impact, regardless whether that evidence overlaps with materiality or any other merits issue.”
Justice J. Barrett, delivered the opinion of the Court, in which Justice Roberts, and Justices Breyer, Kagan, and Kavanaugh joined in full; in which Justices Thomas, Alito, and Gorsuch, joined as to Parts I and II–A; and in
which Justice Sotomayor, joined as to Parts I, II–A–1, and II–B. Justice Sotomayor, filed an opinion concurring in part and dissenting in part. Justice Gorsuch filed an opinion concurring in part and dissenting in part, in which
Justices Thomas and Alito joined.
Read the entire opinion here.