The US Supreme Court agreed on Friday to review the issue of whether shareholders can bring class action lawsuits that allege securities fraud.

In Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement, the questions the court has agreed to address are:

1. Whether a defendant in a securities class action may rebut the presumption of
   classwide reliance recognized in Basic Inc. v. Levinson, 485 U.S. 224 (1988), by
   pointing to the generic nature of the alleged misstatements in showing that the
   statements had no impact on the price of the security, even though that evidence is also relevant to the substantive element of materiality.
2. Whether a defendant seeking to rebut the Basic presumption has only a burden of
   production or also the ultimate burden of persuasion.

The case arose when shareholders of Goldman Sachs sued the company for $13 billion in damages with a claim of securities fraud for statements that were “aspirational and generic” and did not disclose Goldman Sachs’ conflicts of interest.

The shareholders claimed that such actions falsely maintained an inflated stock price for the company, and the subsequent drop harmed the shareholders when the government began reporting allegations of the company’s “client conflicts in certain collateralized debt obligations on subprime mortgages that the firm structured and sold before the financial crisis.”

Goldman Sachs pointed to conflicts between circuit courts on how to handle the questions being considered now, and the Supreme Court thus agreed to review the petition.