(Price impact is a key prerequisite for shareholder class certification.) The Supreme Court, as you surely recall, ruled last June that trial judges may consider the nature of a defendant’s alleged misstatements in weighing whether those representations affected the defendant’s stock price. Goldman has long insisted that the alleged misstatements shareholders cited in the 2010 class action - which dates back to the bank’s creation and sale of complex mortgage-backed securities, including the notorious Abacus collateralized debt obligation – were too anodyne and generic to have impacted the bank’s share price. That was not the outcome Goldman Sachs was hoping for after its trip to the Supreme Court last year. “A finding of price impact (and class certification) would become nearly automatic whenever misconduct is alleged and a company’s stock price declines.” “Unless the district court’s decision is reversed, future plaintiffs can easily locate among a company’s voluminous public statements a generic statement that implicates the same subject as any misconduct,” argued the bank’s lawyers from Paul, Weiss, Rifkind, Wharton & Garrison and Sullivan & Cromwell. And under Crotty’s interpretation of the Supreme Court’s directives, Goldman told the 2nd Circuit, shareholders will be able to sue as a class whenever they can claim a company’s general disclosures were related to subsequent revelations of misconduct. District Judge Paul Crotty of Manhattan, badly misconstrued the Supreme Court’s decision when he certified a shareholder class for the third time last December. Circuit Court of Appeals that despite last year's huzzahs, securities class action defendants and their lawyers should be more worried than ever about the precedent from its case.Īccording to the bank, the trial judge overseeing its case, U.S. Pause the cheering, defense lawyers: Goldman contends in a new brief at the 2nd U.S. Supreme Court delivered its decision in a long-running case against Goldman Sachs Group Inc? (Reuters) - Remember all the excitement in the securities class action defense bar last June, when the U.S.
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