Investor Advocates Declare Victory After Supreme Court’s Goldman Ruling
From the Desk of Jim Eccleston at Eccleston Law:
Investor rights advocates are claiming a victory after the Supreme Court reviewed a case, in which Goldman Sachs was accused of concealing conflicts of interest, and determined to remand it to the appeals court for further proceedings.
The lawsuit, filed by the Arkansas Teacher Retirement System, other pension funds and individual investors, contended that Goldman’s share price was impacted between February 2007 and June 2010 after the firm claimed to have avoided conflicts of interest. The complaint alleges that Goldman was aware of conflicts surrounding the sales of mortgage-backed securities, which prompted the plaintiffs to file a class action suit in 2011. After the U.S. 2nd Circuit Court of Appeals affirmed the class designation last April, Goldman appealed the decision to the Supreme Court. The Supreme Court decided to return the case to the 2nd Circuit for additional review after the justices did not fully accept the positions of either Goldman or the plaintiff pension plans.
The case impacts Regulation Best Interest, which represents the advisor investment advice standard that was launched last year. Reg BI restricts advisors from putting personal interests ahead of those of their clients. The 2nd Circuit Court of Appeals may determine that Goldman is not obligated to abide by its statement about avoiding conflicts of interest, which could provide a pathway for other firms to also avoid Reg BI’s enforcement.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
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