On December 13, 2022, the Supreme Court of the United States granted certiorari in Slack Technologies, LLC v. Pirani. The case presents the question whether Sections 11 and 12(a)(2) of the Securities Act of 1933 require plaintiffs to plead and prove that they bought shares registered under the registration statement they claim is misleading. A divided panel of the Ninth Circuit held that plaintiffs in a case arising out of a direct listing do not need to do so. Slack has argued that the Ninth Circuit’s decision created a split with seven other courts of appeals. The Supreme Court is likely to hear argument in the spring and issue a decision by July.
Background
Federal securities law generally requires securities to be registered. There are several exemptions, including one for shares held by non-affiliates of a company for at least a year. Both registered and unregistered shares may not be sold on an exchange until the company has filed a registration statement under the Securities Act.
In 2018, the SEC approved direct listings of shares. A direct listing is different from a traditional initial public offering (“IPO”) in several respects. In an IPO, a company files a registration statement to issue new shares. In a direct listing, the company files a registration statement to permit shareholders to sell their shares. Unlike in an IPO, where unregistered shares are “locked up” and cannot be sold on the exchange for a period of time, both registered and unregistered shares...
The Trump administration’s fraud prosecution of the Southern Poverty Law Center is set for arraignment on Thursday afternoon. Ahead of the scheduled court appearance in Alabama, defense lawyers fo...