Document ID: ./input/supremecourt_opinions/opinions/20pdf/20-222_2c83.pdf
Page Number: 1.0

(Slip Opinion) 

OCTOBER  TERM,  2020 

1 

Syllabus 

NOTE:  Where  it  is  feasible,  a  syllabus  (headnote)  will  be  released,  as  is 
being  done  in  connection  with  this  case,  at  the  time  the  opinion  is  issued. 
The  syllabus  constitutes  no  part  of  the  opinion  of  the  Court  but  has  been 
prepared  by  the  Reporter  of  Decisions  for  the  convenience  of  the  reader. 
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

GOLDMAN SACHS GROUP, INC., ET AL. v. ARKANSAS 
TEACHER RETIREMENT SYSTEM, ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 
THE SECOND CIRCUIT 

No. 20–222.  Argued March 29, 2021—Decided June 21, 2021 

Respondent shareholders (Plaintiffs) filed this securities-fraud class ac-
tion alleging that The Goldman Sachs Group, Inc., and certain of its 
executives (collectively, Goldman) violated securities laws and regula-
tions  prohibiting  material  misrepresentations  and  omissions  in  con-
nection  with  the  sale  of  securities.  15  U. S. C.  §78j(b);  17  CFR 
§240.10b–5.  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’ in-
flation-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, Plaintiffs invoked the presumption, endorsed by
the Court in Basic Inc. v. Levinson, 485 U. S. 224, that investors are 
presumed to rely on the market price of a company’s security, which in 
an efficient market will reflect all of the company’s public statements,
including misrepresentations.  The Basic presumption allows class-ac-
tion plaintiffs to prove reliance through evidence common to the class. 
Goldman in turn sought to defeat class certification by rebutting the 
Basic  presumption  through  evidence  that  its  alleged  misrepresenta-
tions had no impact on its stock price.  After an initial round of litiga-
tion which resulted in a remand from the Second Circuit, the District 
Court certified the class based on Goldman’s failure to establish by a 
preponderance of the evidence that its alleged misrepresentations had
no price impact.  The Second Circuit authorized an appeal under Fed-
eral Rule of Civil Procedure 23(f), and affirmed in a divided decision,