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The Supreme Court's Decision in Goldman Sachs Confirms Courts Must Consider All Relevant "Price Impact" Evidence When Addressing Class Certification in Federal Securities Fraud Class Actions

Wall Street Lawyer

02 Aug 2021

James Beha and Jocelyn Greer authored an article for the Wall Street Lawyer discussing The Supreme Court’s decision in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, where the Court confirms that the district courts must consider all relevant “price impact” evidence when addressing the class certification stage in federal securities fraud class actions.

“The ‘price impact’ analysis in a federal securities fraud action considers whether a defendant’s alleged misrepresentation actually affected the company’s stock price, as required to support a presumption of reliance under the ‘fraud-on-the-market’ theory,” the authors wrote. “A recent line of Supreme Court decisions permits a securities fraud defendant to defeat class certification by demonstrating the lack of price impact. But those decisions left some uncertainty about the type of evidence a defendant could present to make that showing. In Goldman Sachs, the Court confirmed that, when deciding class certification in a securities fraud case, ‘[t]he district court’s task is simply to assess all the evidence of price impact . . . and determine whether it is more likely than not that the alleged misrepresentations had a price impact.’” 

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