Supreme Court gives Goldman chance to end shareholder suit

Supreme Court gives Goldman chance to end shareholder suit
The justices set aside a federal appeals court ruling in a lawsuit that accuses the company of misleading shareholders by masking conflicts of interest related to mortgage-backed securities it sold. Goldman argued the case made it too easy for shareholders to press class-action fraud suits.
JUN 21, 2021
By  Bloomberg

The Supreme Court gave Goldman Sachs Group Inc. a new chance to stop a lawsuit that accuses the company of misleading shareholders by masking conflicts of interest in mortgage-backed securities it sold.

The justices set aside a federal appeals court ruling that had let the suit go forward. Goldman and its business allies argued the ruling made it too easy for shareholders to press class-action fraud lawsuits. The Supreme Court decision sends the case back to the appeals court level for a new look.

The investors, led by the Arkansas Teacher Retirement System, say they were deceived by Goldman Sachs’s repeated public assurances that it was being vigilant about avoiding conflicts of interests. The shareholders say those assurances proved false when the Securities and Exchange Commission sued the company in April 2010 over a portfolio known as Abacus.

Writing for the Supreme Court, Justice Amy Coney Barrett said it wasn’t clear whether the New York-based appeals court “properly considered the generic nature of Goldman’s alleged misrepresentations.”

The case was the first High Court clash over shareholder lawsuits since former President Donald Trump appointed three justices and created a 6-3 conservative majority.

“We are pleased the Supreme Court has vacated the grant of class certification and we will continue to vigorously defend ourselves as the case returns to the lower courts,” Maeve DuVally, a spokeswoman for Goldman Sachs, said in an emailed statement.

Goldman’s stock jumped 2.4% at 10:26 a.m. in New York. That was in line with the rebound across the sector on Monday after shares of the major banks had slumped last week.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.