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Supreme Court to revisit shareholder class-action threshold
The U.S. Supreme Court in Washington
The Supreme Court agreed Friday to review a petition by Goldman Sachs Group challenging a class-action suit led by the $17.6 billion Arkansas Teacher Retirement System over misrepresentations made to investors during the subprime mortgage crisis, and questioning whether shareholders have too much power to pursue such class-action alliances.
Other plaintiffs in the suit include the $16 billion West Virginia Investment Management Board, Charleston, and the $6.2 million Plumbers and Pipefitters National Pension Fund, Alexandria, Va.
The 2011 lawsuit stemmed from Goldman Sachs Abacus collateralized debt obligation, a subprime mortgage-based financial instrument assembled with the help of hedge fund Paulson & Co. Its contrary bet against the CDO was not disclosed to investors, leading in 2010 to Goldman Sachs $550 million settlement with the Securities and Exchange Commission.
Supreme Court to Hear Goldman Sachs Fraud Case Appeal
The Supreme Court has agreed to consider making it tougher for shareholders to bring class-action lawsuits in securities fraud cases.
The decision to hear the case, Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, came Dec. 11 on appeal from the 2nd Circuit Court of Appeals. The respondents are the Arkansas Teacher Retirement System, West Virginia Investment Management Board, and the Plumbers and Pipefitters National Pension Fund.
The court provided no rationale for its decision, which is its custom.
Goldman Sachs has been accused of concealing conflicts of interest in mortgage-backed securities it sold. The firm claims the appeals court made it unduly easy for aggrieved investors to unite in a single lawsuit.