The securities fraud class action after Goldman Sachs

Abstract

This article analyzes a significant Supreme Court securities law decision from the 2020 term, Goldman Sachs v. Arkansas Teachers Retirement System (Goldman). Goldman was a blockbuster class action, brought by shareholders seeking $13 billion in damages from Goldman Sachs based on claims that date back to the 2008 financial crisis. This article proceeds by taking an in-depth look at the case history of Goldman from start to finish. In the process, it shows that the Supreme Court's recent decision was more impactful than has been widely appreciated. Rather than being a recap of existing precedents, the Court's holding in Goldman made significant changes to some of the core doctrines in securities law that were first set forth in 1988 when the modern securities class action was created by Basic v. Levinson. This article also looks beyond doctrinal categories to assess how the Goldman decision can be understood as the latest chapter in the Supreme Court's longstanding role as a leading policy maker in the law of securities class actions. Lastly, the article explains how the precedent set in Goldman will affect securities litigation on the ground going forward. As a result of Goldman, it will be argued, the class certification stage in shareholder securities fraud suits has been moved closer to an open-ended totality of the circumstances test, in which the federal courts have an increasing number of tools to act as gatekeepers on the merits of a litigation.