Goldman Sachs is seeking leave to return to the U.S. Court of Appeals for the Second Circuit over the recent class certification in its long-standing litigation over housing bubble-era securities violation allegations.

The investment bank's last sojourn at the appellate level ended in a victory. The appellate court struck down a previous class certification issued by U.S. District Judge Paul Crotty of the Southern District of New York, after finding the court failed to apply the correct evidence standard in determining the fraud-on-the-market presumption established by 1988's U.S. Supreme Court's decision Basic v. Levinson.

The suit was filed in the aftermath of the burst of the housing bubble. Investors alleged Goldman's public statements avowing conflict-free fealty to their clients' interests were at odds with the positions they took in a number of funds. These include the Abacus fund that allowed its client, investor John Paulson's hedge fund, to have an active role in selecting assets for the fund, without disclosing that Paulson held the sole short position.

On remand, the court quickly reaffirmed the class status after a one-day evidentiary hearing. Crotty who found the plaintiffs' arguments established a credible link between the news of Goldman's conflicts and the subsequent stock decline, which was sufficient to meet the Basic presumption.

As made clear in its petition, Goldman continues to contend that other banks who made similar public disclosure statements called into question in similar kinds of litigation have victories before the Second Circuit, which has found that no reasonable investor would consider them a guarantee of some concrete fact or outcome.

Goldman also contends that Crotty ignored a key part of the question posed for remand, which focused on the issue of misrepresentation, rather than the news of Goldman's conflicts, which the bank argued is what Crotty focused on.

Crotty's “rush to certify a class once again” required the Second Circuit's review of two issues.

First, Goldman is asking the appellate court to review what it calls Crotty's “speculative expansion” of the price maintenance theory, which the bank argued is only narrowly applied when defendants make overly optimistic claims to halt a stock price drop, or when applied to erroneous statements about market expectations.

Second, Goldman is asking to review what it calls Crotty's legal error by failing to properly apply the preponderance of the evidence standard required by the Second Circuit in its previous remand.

Goldman's legal team is led by Sullivan & Cromwell partner Robert Giuffra Jr., who declined to comment.

The pension fund lead plaintiffs representation is being led by Robbins Geller Rudman & Dowd partner Spencer Burkholz. He declined to comment.