Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System

Supreme Court of the United States · 2021 · Corporations

594 U.S. 113 (2021)

Updated August 1, 2026

Corporationsprice impactclass certificationSection 10(b)Rule 10b-5Basic presumptionfraud-on-the-marketinflation maintenance

Facts

Plaintiff shareholders alleged that Goldman maintained an artificially inflated stock price by making generic public statements about its conflict-of-interest controls and business integrity, such as statements that it had extensive procedures to identify and address conflicts and that clients' interests came first. Plaintiffs claimed those statements were false or misleading because Goldman had engaged in undisclosed conflicts of interest. Under an inflation-maintenance theory, plaintiffs asserted that the statements kept existing inflation in Goldman’s stock price from dissipating until the market learned the truth through a government enforcement action and later news reports, after which Goldman’s stock price fell. At class certification, Goldman attempted to rebut the Basic presumption with evidence, including expert testimony, that the alleged misrepresentations had no price impact.

Issue

At class certification in a securities-fraud class action, must courts consider the generic nature of alleged misrepresentations as evidence relevant to price impact, including in inflation-maintenance cases? And does the defendant bear the burden of persuasion, by a preponderance of the evidence, to prove a lack of price impact when rebutting the Basic presumption?

Rule

In determining whether Rule 23 is satisfied in a securities-fraud class action, courts must consider all record evidence relevant to price impact, including the generic nature of the alleged misrepresentation, even if that evidence also overlaps with materiality or another merits issue. A defendant rebutting the Basic presumption at class certification bears the burden of persuasion to prove a lack of price impact by a preponderance of the evidence.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Investors sue Lakefront BioSystems, a fictional public company based in Chicago, under Rule 10b-5. At class certification, the investors invoke the fraud-on-the-market presumption, and the company offers event-study evidence plus analyst reports suggesting its alleged statements had no effect on the stock price.

How should the court treat the company’s evidence when deciding class certification?

Explanation. At class certification, the court must determine whether Rule 23 is satisfied, and it cannot do so in a securities-fraud case without considering all evidence relevant to price impact. The majority emphasized that this includes qualitative and quantitative evidence, even when the same evidence overlaps with a merits issue.