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Earlier today, the Supreme Court heard argument in Slack Technologies, LLC v. Pirani, which considers the question of whether investors can bring claims based on misleading registration statements and prospectuses issued during the “direct listing” of securities. The justices directly grappled with the issues raised in the brief filed by RKS on behalf of Nokota Capital Management, namely, what level of investor protections should apply when capital is being transferred from insiders to outsiders, and whether the NYSE rule at issue in the case necessarily meant that Slack’s one and only registration statement covered all shares in the listing. The questions posed by the justices did not indicate how the Court is likely to rule. But a number of justices, including Justice Kavanaugh and Justice Kagan, suggested that one option for the Court is to reverse the decision and remand for the lower court to further consider whether Section 12(a)(2) liability, which protects investors in cases of misleading prospectuses, applies in the context of a direct listing. RKS has been following the Slack matter since its origin in the Northern District of California. As one of the rare securities cases that the Supreme Court taken up, the decision will no doubt be impactful to investor rights and how issuers interact with those investing capital.
A full set of the briefing in Pirani v. Slack is available here.
The brief RKS filed on behalf of its client Nokota Capital Management is available here.