Ninth Circuit’s Slack Decision Forges New Ground for Securities Act Liability Related to Direct Listings

The decision appears to create a new rule for determining standing to bring Securities Act claims in the context of direct listings.

The Slack Direct Listing Decision -

On September 20, 2021, the US Court of Appeals for the Ninth Circuit issued its highly anticipated decision in the Pirani v. Slack litigation concerning stockholders’ ability to bring claims under the Securities Act of 1933 related to direct listings, the innovative “going public” alternative to the traditional IPO spearheaded by Latham & Watkins in recent years. In a published 2-1 opinion on this issue of first impression, the panel held over sharp dissent that even “unregistered shares sold in a direct listing” are actionable under Sections 11 and 12 of the Securities Act “because their public sale cannot occur without the only operative registration in existence.”

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