In re Goldman Sachs Group, Inc. Securities Litigation

Updated: January 31, 2019

Status: Ongoing Case

As co-lead counsel, Labaton Sucharow represents lead plaintiffs who allege that the Goldman Sachs (Goldman) violated the federal securities laws by making false and misleading statements with respect to events surrounding Goldman's sale, in 2006 and 2007, of the Abacus, Anderson, Hudson and Timberwolf collateralized debt obligations (CDO). Lead plaintiffs also allege that Goldman concealed from investors that the SEC was investigating Goldman for making materially misleading statements in connection with the Abacus transaction.  

On June 21, 2012, the court denied in significant part the Goldman defendants' motion to dismiss. The court granted defendants' motion with respect to Goldman's failure to disclose the SEC investigation, but denied it in all other respects. However, the court denied the motion to dismiss based on alleged material misstatements and omissions concerning Goldman's business practices and conflicts of interest, which are actionable in light of Goldman's fraudulent conduct with respect to the CDO transactions named in the complaint. The court ruled that investors could proceed with claims that Goldman should have disclosed those positions to clients, and should also have disclosed hedge fund Paulson & Co's alleged role in hand-picking risky subprime mortgages that went into one of the CDOs, known as Abacus.

The court further stated that Goldman "could not have genuinely believed that its statements about complying with the letter and the spirit of the law-and that its continued success depends on it, valuing its reputation, and its ability to address 'potential' conflict of interests were accurate and complete."

Addressing the defendants' argument that Goldman's repeated public statements about the propriety of its business practices were mere "puffery," the court found that: "Goldman's arguments in this respect are Orwellian. Words such as 'honesty,' 'integrity,' and 'fair dealing' apparently do not mean what they say; they do not set standards; they are mere shibboleths. If Goldman's claim of 'honesty' and 'integrity' are simply puffery, the world of finance may be in more trouble than we recognize."

On June 23, 2014, the court denied defendants' motion for reconsideration. On October 7, 2014, the court denied defendants' motion for interlocutory appeal of the court's June 23, 2014 order. On September 24, 2015, the court granted the plaintiffs’ motion to certify the class. Labaton Sucharow was appointed class counsel.

Shortly after the district court’s ruling on class certification, the defendants filed a petition to appeal that ruling, which the Second Circuit granted. In January 2018, the Second Circuit reversed the class certification and remanded the case back the Southern District of New York. On August 14, 2018, the District Court again granted class certification, concluding that "defendants have failed to rebut the basic presumption by a preponderance of evidence." The Second Circuit granted defendants' petition to file a second appeal, and also granted plaintiffs motion for expedited briefing on that appeal. 

The case is In re Goldman Sachs Group, Inc. Securities Litigation, No. 10-cv-03461 (S.D.N.Y). Lead plaintiffs are the Arkansas Teacher Retirement System, the West Virginia Investment Management Board, and the Plumbers and Pipefitters National Pension Fund. The defendants are Goldman Sachs Group, Inc. and certain of Goldman's officers.